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Why Lina Khan won’t back down

July 20, 2023 | By Chris Pedigo, SVP Government Affairs – DCN @Pedigo_Chris

It’s no small thing to be named Chair of the Federal Trade Commission (FTC). Unsurprisingly, Lina Khan’s path to that position is an impressive one. Significantly, it was characterized by deep study and evaluation of monopolies and antitrust law. Absolutely everyone expected this to be central to her tenure, and she has not disappointed in that regard. With big tech companies in her sights, she’s taken on Meta for antitrust, Google for its ad practices, and Amazon for its consumer practices around Prime.

But there are those questioning Khan’s strategy of aggressively filing cases. The criticism built to a crescendo recently when U.S. District Court Jacqueline Scott Corley declined to block the Microsoft acquisition of Activision, handing a defeat to the FTC which had hoped to snuff out a potential monopoly in its infancy.

The FTC alleged that Microsoft’s acquisition of Activision (and its bevy of popular games such as Call of Duty) could lead to a dominant position for Microsoft in the gaming sector. Microsoft quickly sought to nip the FTC’s concerns in the bud by agreeing to keep popular game titles available on rival platforms. There is, however, some debate around whether or not that was enough to address competition issues.

There’s also some debate about whether Judge Corley correctly interpreted the law. Matt Stoller notes that the Clayton Act guards against mergers that “may substantially lessen competition” while Judge Corley stated in her opinion that FTC had not proven the deal “will substantially lessen competition.” Unfortunately for the FTC, the shift from “may” to “will” sets a substantially higher bar and one that courts have supported in recent history.

Corley’s decision has led numerous groups  (some of which receive an outsized portion of their funding from big tech companies) to loudly question Kahn’s strategy at the FTC. It’s a bit hard to take these Monday morning quarterbacks very seriously, however, because some of these same groups also argue at every turn to limit the FTC’s regulatory authority. Their criticism of the FTC and the Department of Justice Antitrust Division is so routine and frequent that you are left to wonder whether they envision any role for the federal government in ensuring a fair marketplace. Most, however, understand that the FTC plays a critical role in enforcing federal consumer protection laws that prevent fraud, deception, and unfair business practices—including those that are anticompetitive.

As anticipated, Khan is clearly trying to shift the courts’ interpretation of competition and antitrust law. Of her strategy, she’s unabashedly stated that “you lose 100% of the shots you don’t take.” And given her track record so far, a rumored major antitrust suit in the works against Amazon along with newly-released merger guidelines from the FTC and Department of Justice, she’s going to keep taking shots—big ones. On top of these high-profile cases, as Jessica Rich, former Director of the FTC Bureau of Competition, opined earlier this year, the FTC has seemingly shifted its focus from “whack-a-mole” enforcement to broader rulemaking efforts.

Khan’s efforts to move the FTC into a stronger enforcement position is one that reflects a global trend, as regulators around the world ramp up their competition and antitrust efforts. For example, Europe recently enacted the Digital Markets Act and Digital Services Act, which will lead to a new wave of crackdown on dominant companies. This isn’t just Kahn’s concern, or an American concern. Policymakers around the world are trying to level the playing field.

As to Kahn’s efforts to step up the FTC’s position as rule maker and enforcer, it is critical to recognize that the history of the FTC’s authority and posture is characterized by ebbs and flows. Courts and Congress have empowered or restrained the FTC at various points in our history. For most of the last 20 years, FTC Chairs have had to operate with one eye over their shoulder.

Former Chair Jon Leibowitz secured high profile consent decrees with Google and Facebook over consumer privacy violations. These decrees were heralded as landmark agreements and have also provided the FTC with access and leverage with these companies. However, it is important to note that the consent decrees were pursued instead of expensive, more risky lawsuits. Now, with the benefit of hindsight, many have criticized the FTC for not doing enough to protect consumers and prevent monopolization. And this is where Kahn’s leadership comes into play in a big way.

Changing the courts’ interpretation of competition law is not easy. But this change—modernization—happens in every facet of law, and it is necessary to adapt to new factors. Until and unless Congress can break the permanent state of gridlock, we should support Khan’s efforts to establish a more proactive and robust role for the FTC, one that can foster more healthy competition to the benefit of consumers and businesses.

Opener art: Lina Khan, Competition and Regulation in Disrupted Times, Brussels, Belgium
Used under a CC BY-SA 2.0 license. Credit: Cory Doctorow