The Stakes Behind the Fight Over Lina Khan’s Future at the F.T.C.
Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch, Ephrat Livni
▻https://www.nytimes.com/2024/07/26/business/dealbook/behind-the-democrats-fight-over-lina-khans-future.html
Kann es heute in der US-domnierten Welt gelingen, Macht und Einfluß der Wirtschaftsgiganten auf ein sozial verträgliches Minum zu reduzieren, oder handelt es sich bei Versuchen dazu um Kämfe gegen Windmühlenflügel? Antworten auf diese Frage ergeben sich aus der Beobachtung von Erfolg und Mißerfolg von Lina Khan, der Vorsitzenden der Aufsichtsbehörde Federal Trade Commission (FTC), vergleichbar einer Kombination des deutschen Bundeskartellamts mit staatlichen und nichtstaatlichen Einrichtungen des Verbraucherschutz.
The debate over Lina Khan’s tenure as F.T.C. chair reflects wider anxiety over how a Kamala Harris administration would regulate business.Credit...Haiyun Jiang for The New York Times
A question about the future of antitrust
News that Reid Hoffman, the billionaire LinkedIn co-founder and major Democratic donor, wants Vice President Kamala Harris, if she wins in November, to replace Lina Khan as chair of the F.T.C. provoked outrage on the left. Senator Bernie Sanders, independent of Vermont, called it “unacceptable,” and Tim Wu, the Columbia Law School professor and former Biden antitrust official, demanded that the Harris campaign return Hoffman’s donations.
Khan is perhaps the most consequential regulator for business in the Biden administration, and her fate as F.T.C. chair underscores anxiety among Democrats about how Harris would approach antitrust policy should she become president.
A president can’t fire an F.T.C. chair at will. Per a 1935 Supreme Court case, Humphrey’s Executor v. United States, a president can only remove an F.T.C. commissioner for good cause, which excludes policy agreements.
That said, the president has the power to designate the chair among existing members. So Khan could be stripped of that role and replaced with a colleague, though that could be awkward.
The political calculus of replacing Khan is complicated. Khan’s term expires in September, though she could serve until any replacement is confirmed by the Senate. But nomination processes take time and if Republicans retake the Senate in November, that could make it difficult for a Harris administration to get a different nominee confirmed.
One wrinkle: Donald Trump’s own running mate, Senator JD Vance of Ohio, has praised Khan as part of his anti-Big Tech stance.
Khan has given no indication that she plans to step down. She has shown a desire to permanently reshape U.S. antitrust law, dating to her law school days. When DealBook asked an F.T.C. spokesman if Khan would consider serving as chair in a Harris administration, he said, “Yes.”
The debate underscores Democrats’ anxiety over how Harris would govern. Khan’s appointment arose in part out of Biden’s effort to shore up progressive support in 2020 by giving Senator Elizabeth Warren of Massachusetts significant sway over economic regulatory agencies. “Warren, to an extraordinary degree, was the gatekeeper for the administration about appointments,” William Kovacic, a former F.T.C. chair, told DealBook.
But corporate donors have backed Harris in part because they believe she would be more moderate when it comes to regulating business.
It’s unclear what Harris’s own antitrust views are, or whether she would seek to continue the Biden administration’s approach. “I don’t know if that commitment that Biden made to Warren is going to bind Harris,” Kovacic said. “The crucial question is what is her relationship going to be with the strong intervention-minded members of the Democratic Party who extracted that promise.”
In other election news: Barack Obama endorsed Harris, after the former president had sought to stay impartial on the matter. A new Times/Siena poll shows Harris in a virtual tie with Trump among likely voters. And the Black Economic Alliance PAC recently convened a call with more than 250 business leaders — including Charles Phillips, formerly of Infor; Roz Brewer, formerly of Walgreens Boots Alliance; and Ken Frazier, formerly of Merck — asking them to back Harris for president, DealBook is first to report. The B.E.A. PAC has raised more than $3 million for the Democratic presidential ticket.
Lina Khan’s rise was heralded as an antitrust revolution. Now she has to pull it off
▻https://edition.cnn.com/2023/10/16/tech/lina-khan-risk-takers/index.html
17.10.2023 by Brian Fung, Catherine Thorbecke - When the Federal Trade Commission and 17 states sued Amazon last month in a landmark antitrust case, Lina Khan, chair of the FTC, described it as a “cutting-edge” lawsuit that captures “state-of-the-art thinking” about modern monopolies in the tech industry.
The closely watched case may be the biggest of the 34-year-old’s career. It symbolizes the toughest regulatory challenge Amazon has faced in recent memory; for Khan, however, it is also the culmination of a years-long effort to challenge decades of received wisdom about how governments can protect competition, particularly in the tech sector.
If the Khan-spearheaded suit succeeds, it could mean huge changes for Amazon’s sprawling e-commerce business. But perhaps even more meaningfully, it could become an important step toward Khan’s larger goal: To broaden the scope of antitrust law and to encourage regulators and courts to apply it more creatively in shaping the entire global economy.
The Amazon suit isn’t Khan’s only effort to rein in Big Tech. Other ongoing suits have targeted industry giants including Microsoft and Meta, the latter on multiple fronts. It’s a huge gamble, spending gobs of taxpayer dollars and pitting small teams of government lawyers against the world’s most powerful and deep-pocketed corporations.
Packages move along a conveyor belt at an Amazon Fulfillment center on Cyber Monday in Robbinsville, New Jersey, in November 2022.
The point of it all, Khan told CNN in a recent interview, is to bring more of the government’s resources to bear on the daily economic problems of ordinary Americans.
“What we hear day-in, day-out is that people too often feel like they’re not getting a fair shake in the market,” Khan said. “There’s more and more public awareness about [how] decisions the FTC is making on antitrust or consumer protection are affecting people in their day-to-day lives.”
If her push pays off, Khan could become one of the most consequential FTC chairs in history. But, two years into her tenure, she is up against determined opponents in business and law, and a mixed record in court that her critics say is evidence of her folly.
She may also be running out of time. Khan’s term expires next September. And should a Republican win the White House in 2024, or should President Joe Biden win reelection and choose another FTC chair, her time at the agency helm could soon come to a close. In the interview, Khan acknowledged she would step aside if a new administration sought to replace her. “That’s the president’s prerogative,” she told CNN.
For now, at least, Khan leads an agency that has a dizzying number of active investigations, lawsuits and regulatory proposals on the table. Many of them aren’t close to being resolved, and some may not reach a conclusion until long after she is gone. But her supporters and critics agree: From the beginning, Khan has helped spark a global debate about the power of technology companies and the role governments play in regulating them.
“Everybody in our field, they know who Lina Khan is, and they know about her ideas,” said William Kovacic, a former FTC chair during the George W. Bush administration.
Khan’s path might have turned out differently had it not been for Barry Lynn, an early mentor who hired Khan in 2011 not long after her graduation from Williams College.
In their initial conversations, Lynn recalled, Khan seemed to have an intuitive grasp of how corporate control of markets could have important effects on everything from workers to consumers.
One of Khan’s first projects at Open Markets — at the time part of the Washington think-tank known as the New America Foundation — was an in-depth study of Amazon and its impact on authors and book publishing — a line of inquiry that would come to define her career and led to a viral 2017 law article she wrote about Amazon’s economic dominance.
But she also explored other topics, including chicken farming. That led to a 2012 article in The Washington Monthly arguing the Obama administration failed to act decisively enough to stop large poultry processors from exploiting independent chicken farmers on a vast scale.
Even in those early writings, Khan’s critical view of the status quo was emerging — questioning the government’s reluctance to sue meat processors amid fears that litigation could lead to damaging court losses.
“One wonders,” she wrote, “whether the administration’s actions—taken as a whole—did not set the farmers back as much as would a loss in court.”
That appetite for litigation has persisted. Khan has consistently indicated a preference, if not a zeal, for taking companies to court. Even losing could still help more broadly, she has argued, if it convinces Congress to update the laws in response to new competitive harms.
Driving her convictions, Lynn said, is a powerful sense of justice, as well as a “healthy sense of anger.”
Lina Khan, the author of the Yale Law Journal article, “Amazon’s Antitrust Paradox” is pictured here on July 7, 2017 in Larchmont, New York.
“I remember one day sitting around talking,” Lynn recalled of the chicken farming story. “She was like, ‘What these people are doing, it’s just wrong … It’s insulting, because it is intellectually so unjustifiable.’” (Khan said she did not recall saying those exact words but agreed with the overall sentiment.)
Khan blamed the farmers’ plight on Reagan-era policymakers who pushed to reinterpret antitrust law primarily through consumer prices instead of a broad spectrum of shared societal values — a move she said promoted consolidation, reduced competition (and accountability) among meat processors, and enabled the farmers’ abuse in the first place.
That shift in legal doctrine was profound, shaping how courts have applied antitrust law ever since.
Defenders of the change have argued it’s led to decades of cheaper prices for consumers and created more stability for businesses.
Khan and her allies have argued, by contrast, that an excessive focus on price overlooks how companies might harm competition in less obvious ways, affecting everything from labor markets to product quality to consumer privacy.
Khan’s ideas have challenged the closest thing to a sacred cow in antitrust law. Now, armed with the power to investigate companies and to frustrate mega-deals, she is betting big and taking on America’s richest businesses to test her vision for a more expansive form of monopoly enforcement.
“She’s sort of trying to overturn a very well-entrenched orthodoxy,” and “decades worth of court decisions that have been influenced” by it, said Robert Hockett, another early mentor of Khan’s who now teaches at Cornell Law School. “It’s a tough road to hoe.”
While still a law school student, Khan and her 2017 article on Amazon — published in the Yale Law Journal — championed a unique approach to antitrust policy and sparked a new explosion of academic research on the topic.
It also caught the eye of lawmakers trying to find new ways to reel in the dominance of America’s powerful technology companies.
In 2019, when he was staffing up a landmark investigation of Big Tech, Rhode Island Democratic Rep. David Cicilline deliberately sought out Khan. By this time, her paper on Amazon had already taken the academic world by storm, and he believed hiring her could amplify what he saw as the first antitrust probe performed by Congress in half a century.
“I knew that if we could bring Lina into the investigation, it would really elevate people’s expectations,” Cicilline told CNN in an interview.
With Khan’s help, the 16-month investigation produced a 450-page report concluding tech giants enjoyed unchecked “monopoly power” that led to a raft of legislative proposals. The most ambitious of those never became law, but Khan’s role in the probe, which Cicilline described as “critical,” helped further raise her profile.
The logos of Google, Apple, Facebook, Amazon and Microsoft are seen displayed on a mobile phone in December 2020.
In 2021, a few months after the House report was released, the recently elected Biden announced Khan would not only serve as an FTC commissioner but would leapfrog the agency’s existing members to become its most senior appointee.
In office, Khan has embarked on an ambitious program not only to scale up US antitrust and consumer protection enforcement but also to expand the scope of the law in new ways.
In addition to last month’s Amazon suit, the FTC under Khan has sued the company for allegedly tricking users into signing up for its Prime service and convinced Amazon to adopt multimillion-dollar privacy settlements surrounding its Alexa and Ring home devices.
Khan has continued an FTC lawsuit filed during the Trump administration that seeks to break up Facebook-parent Meta. She sought to prevent Meta from buying a virtual reality startup, Within Unlimited, and, in a rare move, to revisit and expand the scope of Meta’s historic $5 billion Cambridge Analytica settlement to cover children’s personal data.
Khan also brought Microsoft back under the antitrust microscope for the first time since the turn of the millennium, pushing to block the company’s $69 billion acquisition of gaming giant Activision Blizzard.
Since Khan’s appointment, the FTC has investigated or sued to block more than three dozen proposed mergers, said agency spokesperson Douglas Farrar, which in turn has led to 17 settlements, 17 deals being abandoned by the companies and one — the Within Unlimited case — where the FTC has conceded in the courts.
FTC Chairwoman Lina Khan and SEC Chairman Gary Gensler testify during the House Appropriations Subcommittee on Financial Services and General Government hearing titled FY2023 Budget Request for the Federal Trade Commission and the Securities and Exchange Commission, on Capitol Hill on May 18, 2022.
Some of those cases reflect stepped-up enforcement against vertical mergers, a type of deal involving companies in different lines of business that critics including Khan have said were largely ignored in recent decades due to an excessively narrow focus on consumer prices.
In one of her most significant policy moves, Khan and her Justice Department counterpart, Jonathan Kanter, have worked to revamp the federal guidelines that describe how and when the US government may consider a merger to be illegal, including, for the first time, how a merger’s impact on worker pay and benefits may affect a deal’s overall legality.
Other major steps Khan has taken include proposals to ban noncompete clauses in employer agreements the FTC estimates have cost American workers $250 billion a year.
Khan has also made data privacy issues a priority. In a pair of record-breaking settlements, Epic Games, the maker of “Fortnite,” agreed to pay more than half a billion dollars to resolve allegations it tricked players — including children — into making unintended purchases within the game. And after the reversal of Roe v. Wade, the FTC has made a point of highlighting how it is paying attention to the misuse of reproductive health data.
Along the way, Khan has faced several high-profile court setbacks, including in some of the aforementioned cases, that have given her opponents more ammunition.
“You are now 0 for 4 in merger trials. Why are you losing so much?” demanded California Republican Rep. Kevin Kiley at a House oversight hearing this summer. “Are you losing on purpose?”
Earlier this year, the FTC gave up its Within Unlimited case against Meta after a federal judge declined to block the merger. The rejection dealt a blow to the FTC’s novel legal theory that Meta was trying to thwart future competition in a developing market for virtual reality tech. And federal courts have twice rejected the FTC’s bid to halt Microsoft’s Activision merger, which officially closed last week after being approved by UK regulators.
In her interview with CNN, Khan said she was “quite happy” with the FTC’s merger work and cited as success feedback she’s received from business leaders about the agency’s “deterrent effect.”
“We’ve heard that executives are taking much more seriously the potential antitrust risks of deals on the front-end,” she said, adding that “deals are not being pursued because they’re recognized on the front end as being legally suspect.”
Chair of the Federal Trade Commission Lina Khan during a House Judiciary Committee hearing in Washington, D.C., on July 13.
Beyond the litigation, many of Khan’s proposed rules are bound to invite legal scrutiny. Topping the list is the FTC’s draft rule to ban noncompetes, said Kathleen Bradish, acting president of the American Antitrust Institute.
“If they try to implement this rule, it’s going to be tied up for a while in the courts,” said Bradish, who has otherwise supported the FTC’s tougher competition agenda.
Khan’s corporate opponents argue that the very record that cemented her reputation should disqualify her. Amazon and Meta have both pushed for Khan to recuse herself from matters involving the companies, questioning her objectivity.
Khan resisted those calls, saying she has never prejudged any case or set of facts and that she has no financial conflicts of interest that would necessitate a recusal. Last year, the judge presiding over the FTC’s case to break up Meta ruled Khan did not have to recuse herself from that case, because, among other things, Khan’s views on antitrust policy did not amount to a “personal animosity” that would legally disqualify a prosecutor.
Khan’s critics are not limited to those outside the FTC; its two Republican commissioners have stepped down after objections to her handling of the agency. One of the two GOP commissioners, Christine Wilson, resigned in February in protest, accusing her in an op-ed not only of bias against companies like Meta but also of governmental power grabs. (Wilson did not respond to requests for an interview; Khan responded to Wilson’s departure with a joint statement alongside the agency’s two other Democrats thanking her for her service. The other former GOP commissioner, Noah Phillips, declined to be interviewed; at the time of his departure, he had cited family reasons as a primary factor in his decision.)
The lawsuit the FTC filed last month against Amazon is a far more streamlined set of arguments than critics have lobbed at the company in the past.
It focuses on Amazon’s use of allegedly unfair tactics to ensure it always offers the lowest prices on the internet and to encourage sellers to purchase Amazon’s own fulfillment services. The case makes no claims of liability due to use of seller data, alleged predatory pricing, past mergers or its cloud computing business, all of which figured prominently in either the congressional report Khan helped author, her 2017 paper or both.
If there is any discrepancy between her earlier work and last month’s lawsuit, Khan told CNN, it can be chalked up to two things: investigative access that Khan didn’t have as a law student and changes in industry practices since 2017 and even since 2019 when she worked on Capitol Hill.
“Your entire understanding of what’s going on beneath the hood is going to look different than when you’re on the outside doing independent research,” Khan said. More generally, she added, the suit by the FTC and the states “is about tactics that Amazon is engaging in today.”
The Amazon.com website is seen on a laptop in New York in September. The US Federal Trade Commission sued Amazon.com Inc. in a long-anticipated antitrust case, accusing the e-commerce giant of monopolizing online marketplace services by degrading quality for shoppers and overcharging sellers.
Whatever Amazon may have done in the past, she argued, it is now in an “extraction mode” that illegally siphons value from consumers and independent sellers by anticompetitive means.
Amazon has said the case is “wrong on the facts and the law,” and a trade group that represents the company, NetChoice, argues that Khan’s track record shows she has already fallen flat on the lofty expectations of systemic change that accompanied her confirmation.
“They aren’t picking good cases,” said Carl Szabo, NetChoice’s vice president and general counsel. “It’s not making smart bets.”
“There’s no reason to think her motives are anything other than genuine,” Szabo added. “Unfortunately, the effects of her actions just happen to produce bad outcomes.”
Many of Khan’s policy initiatives — as for any agency chief — could take multiple administrations to stick, and only if those future administrations remain committed to initiatives like Khan’s draft merger guidelines and noncompete rules.
Several legal experts drew sports analogies: Khan is still in the early innings, some argued. To win more matches requires playing more and being willing to lose, another said. And a third argued that securing wins is critical to boosting team morale.
Whatever happens in the courts, though, Khan has created a durable change in how people talk about competition, according to Kovacic.
“All of a sudden, the upholders of the status quo look old and tired to me. There’s truly a generational change happening,” Kovacic said. “I think that’s going to last.”
#USA #Monopole #Amazon #Plattformkapitalismus #Regulierung
