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Why are Facebook and Amazon afraid of Lina Khan? | Business and economic news


Most Americans can’t name the chairman of the US Federal Trade Commission (FTC) — the country’s antitrust watchdog — because the position doesn’t normally attract much attention. But Lina Khan is changing that.

The 32-year-old associate professor of law at Columbia University (currently on leave as she serves in government) has Big Tech in the fray, and the FTC may be ready to take more definitive antitrust action than it has been in decades.

Since she was named FTC chairman by US President Joe Biden in mid-June, two tech giants — Amazon and Facebook — have filed petitions to get her fired from making decisions about them.

Khan will chair her second open meeting on Wednesday since he took over from the organization.

Here’s what you need to know about the brewing battle between Khan and some of the world’s biggest tech companies.

First things first. What does the FTC do?

The Federal Trade Commission was created in 1914 primarily to “destroy the trusts”.

Since then, it has evolved to protect consumers by creating a “vibrant economy characterized by fierce competition and consumer access to accurate information”.

It is headed by five commissioners and there cannot be more than three from the same political party. The FTC now has a Democratic majority.

So what kind of power does it have?

Great power. The FTC can investigate, take enforcement action, and impose rules and sanctions for violations.

Decisions depend on votes, but as chairman Khan sets the agenda for the bureau.

Lina Khan has argued that Amazon is a monopoly comparable to the American railroads of the early 20th century [File: Graeme Jennings/Washington Examiner/Bloomberg]

So who is she?

Khan made her name in 2017 when she published an article in the Yale Law Journal entitled Amazon’s Antitrust Paradox while in college. Her article urged a redefinition of the meaning of ‘monopoly’ for the digital age.

Why did it have to be redefined?

In the past, trust regulation focused on price. Monopolies would potentially have the power to raise prices, harming a consumer.

But since companies like Amazon use discounted prices to beat the competition, Khan argues that this behavior is also harmful. Lower prices give it an outsized market share, allowing it to impact the economy and create an environment where even competitors must become dependent on Amazon and its platform to succeed.

And how did Khan redefined monopolies?

Khan argued that Amazon was a monopoly comparable to the American railroads of the early 20th century. And monopolies are bad, because while low prices can make consumers happy in the short term, they are bad for the economy and for individual consumers in the long run because they stifle competition – ultimately hurting innovation – and innovation keeps economies competitive.

“Consumers’ long-term interests include product quality, variety and innovation – factors best fostered by both a robust competitive process and open markets,” she wrote in the paper.

Did everyone agree with her?

No. Critics argue that Amazon’s popularity and low prices should not make the company a target, and Amazon argues that its unique approach creates new opportunities and competitive opportunities for emerging companies.

Republican Senator Orrin Hatch labeled Khan’s statement and those who support it “hipster antitrust.”

Why Did US President Joe Biden Tap Khan to Lead the FTC?

Biden thinks Khan is the woman for the task of reforming antitrust laws and cracking down on Big Tech over anticompetitive practices.

Progressive, as Massachusetts Senator Elizabeth Warren agrees — she called Khan’s leadership of the FTC “a tremendous opportunity to make major, structural changes by reviving antitrust enforcement and fighting monopolies that are destroying our economy, society and society.” threaten our democracy”.

Federal Trade Commission Chair Lina Khan (center left) stands behind President Joe Biden as he signs an executive order on July 9 aimed at fostering competition in the US economy. [File: Evan Vucci/AP Photo]

How has Big Tech responded?

Facebook last week filed a petition to have Khan cleared of antitrust cases involving it, arguing that her past writings and comments bias her against the social media giant.

Amazon — which is facing multiple investigations by the FTC — has filed a similar motion to have Khan withdraw from proceedings involving it.

Can Amazon and Facebook have their way?

Possibly. In a 1970 case Cinderella Career and Finishing School vs. FTC, the courts ruled that the seat refusing to repossess itself was a denial of a fair trial. And in a 1966 case, American Cyanamid Co vs. FTC, a court disqualified the chairman of a hearing because he had previously conducted investigative work for the Senate Subcommittee on Antitrust and Monopoly.

Even if the firms’ appeals are unsuccessful, experts say this move by Big Tech could cast a shadow over the FTC’s involvement and Khan’s leadership in future antitrust cases.

What does Khan say about Facebook and Amazon revocation requests?

Under the ethical law, which mainly focuses on financial conflicts, Khan says she doesn’t have to evade herself. Khan promised to follow the facts of the case during her confirmation process and said that if any problems arose, she would consult the FTC’s ethics regulators.

What is Biden’s plan to boost competition in general?

While not as progressive as other Democrats in the 2020 presidential race, Biden ran on a pro-union platform and has pledged to better protect consumers.

To that end, he recently signed an executive order listing 72 initiatives to limit corporate power and increase competition from companies across a wide range of sectors, including Big Tech.

What about the Republicans?

How best to regulate US tech giants like Amazon, Google, Apple and Facebook has become a rallying cry for both sides, even in the polarized US political climate, although the parties often disagree on the best approach.

In a deeply divided Congress, it is telling that 48 Democratic senators and 21 Republicans supported Khan’s nomination to lead the FTC. However, some Republicans have expressed skepticism that she has enough experience for the job.

And last month, both Democratic and Republican lawmakers unveiled a package of five bills designed to rule Big Tech’s power by creating guardrails around mergers and a more level playing field for competitors.

With the bipartisan support of the antitrust law and Khan’s bipartisan support, the issue is likely to become the focus of the FTC’s work in the coming months.



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