FTC Chair Khan is taking swings at Big Tech and changing Silicon Valley : NPR7 min read
When Lina Khan came in as chair of the Federal Trade Commission in 2021, she came in swinging.
The young law professor and antitrust expert vowed to shake things up at a regulator many people don’t even think about – the FTC is essentially the government’s watchdog for businesses. Khan swore to break up corporate monopolies and stymie the power of Big Tech through strategic lawsuits.
Her approach has been called “aggressive,” “bold” and “radical.” House Republicans released a 113-page report on Tuesday that painted the FTC’s current probe into Elon Musk’s purchase of Twitter as beyond exhaustive, detailing what they described as a “deluge” of demands for information from the company.
Khan’s approach is wholly different from many previous FTC chairs who focused on consumer protection but didn’t necessarily bring blockbuster cases.
Khan is going after the concentration of power. She’s tackled Amazon on wage theft allegations, Meta on antitrust issues and Google on reportedly deceptive advertising.
Now, she’s set herself up for another big battle in coming months over banning noncompete agreements, which companies use to block workers from taking new jobs at competitors.
Khan hasn’t won every round, but she may still be winning the match. Silicon Valley appears to be changing how it conducts business in order to head off threats from the newly assertive commission.
Tech mergers and acquisitions were down in 2022 after an all-time high in 2021 (although various economic factors also played into this), and some companies are amending their privacy and data collection policies.
With its litany of lawsuits, the FTC has signaled to tech giants that it’s keeping an eye on them.
“Silicon Valley is a very different place than it was three years ago,” said Barry Lynn, the executive director of the Open Markets Institute, where Khan previously worked as a researcher and then later as director of legal policy.
That’s mainly because, he said, “we have these enforcement agencies who now say, ‘We’re coming at you. The business that you’ve been engaging in for the last 20 years, that’s no longer feasible. We no longer regard that as legal.'”
By all accounts, Khan is a hard worker with a nose-to-the-grindstone ethos. While the entirety of her tenure at the FTC has been during the pandemic, she’s gone into the office whenever she can, according to a New Yorker profile.
At just 34, Khan has already built a resume that includes being a law professor at Columbia University and legal counsel for the House Subcommittee on Antitrust, Commercial and Administrative Law.
She gave birth to a son in January and now is on a short parental leave, according to Douglas Farrar, an FTC spokesman.
Farrar said Khan’s work at the agency has included deterring companies from “anticompetitive business practices” and that now they “are choosing to invest and innovate instead of pursuing illegal schemes that they know will be swiftly met with real consequences.”
Khan’s push on Big Tech goes back to early days of her career
When Khan was in law school, she wrote “Amazon’s Antitrust Paradox,” a paper in which she argued the tech “titan” needed to be broken up. It went viral.
Then, while working for the House subcommittee, she helped write a 449-page report that proposed limiting the power of Apple, Amazon, Facebook and Google. It said the tech companies “have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”
Within a month of her joining the FTC, both Amazon and Facebook sent the agency motions saying Khan should recuse herself from decisions on antitrust cases involving those companies.
“We’re living in an age of unprecedented economic consolidation,” said Katherine Van Dyck, senior legal counsel for the Washington-based Economic Liberties Project. “Lina Khan’s methods are a threat to that and to the people who have that economic power.”
Republican recently made “noisy exit” from the commission
Along with the tech companies, Khan has gained some other enemies, or at least critics, since her confirmation in June 2021.
Her political critics’ voices were amplified by Tuesday’s report from House Republicans regarding her probe into Musk’s $44 billion purchase of Twitter in October.
The report from the Subcommittee on the Weaponization of the Federal Government chaired by Jim Jordan, R-Ohio, alleges the FTC “is orchestrating an aggressive campaign to harass Twitter.” It said the agency sent more than a dozen letters to Twitter in a span of 10 weeks that contained “more than 350 specific demands,” thus creating a “substantial burden on the company’s operations.”
Additionally, both Republicans on the FTC’s five-member commission have recently resigned, and one published a fiery op-ed last month letting the world know she was leaving in protest.
Former Commissioner Christine Wilson— appointed by former President Donald Trump in 2018—wrote in the Wall Street Journal op-ed that she was resigning “in the face of continuing lawlessness” and “consider this my noisy exit.”
In a statement Khan and the two Democrat commissioners, Rebecca Slaughter and Alvaro Bedoya, said: “While we often disagreed with Commissioner Wilson, we respect her devotion to her beliefs and are grateful for her public service.”
The other Republican commissioner, Noah Phillips, departed in October, well before his term ended.
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A small agency taking on huge corporations
President Joe Biden has made it plain he wants to crack down on Big Tech and Khan is one of his leading weapons. He also appointed Tim Wu, who advocated to break up Facebook, to the White House National Economic Council (Wu has since left). And he named Jonathan Kanter to lead the Department of Justice’s antitrust division. Kanter brought a wide-reaching case against Google in January over allegations of monopolizing advertising revenue.
Since Khan became chair, the FTC has fined corporations hundreds of millions of dollars and halted mergers in defense contracting, hospitals and technology.
The agency has around 1,100 employees, but, Khan says, it’s stretched thin considering the scope of its mandate.
“We don’t have the resources, oftentimes, to go fully toe-to-toe with some of the biggest companies in the economy who are extremely powerful, extremely wealthy,” Khan said in an interview with NPR’s All Things Considered in December.
Still, under Khan, the FTC has recovered $60 million in lost wages for Amazon delivery drivers and returned $115 million in refunds to MoneyGram customers who were duped by scammers. In one of the biggest settlements in FTC history, video game maker Epic Games paid a fine of $520 million for reportedly tricking players to make unintended purchases and violating the Children’s Online Privacy Protection Act.
One of its more rowdy fights has been around “Right to Repair” rules that are centered on the idea people should be able to fix their broken gadgets, rather than be forced to buy new ones.
The FTC has ramped up law enforcement against companies that have repair restrictions. Apple, Microsoft, Amazon and Google have all lobbied to quash “Right to Repair” laws on the state level. Any new FTC rules could boost those state laws and require the companies to provide nationwide repair programs.
It hasn’t been all wins for Khan, however.
The FTC lost a lawsuit against Facebook parent Meta in January. The FTC had sued Meta last July over its acquisition of virtual reality company Within Unlimited. It used a novel legal approach, arguing the deal would upset future competition, but the judge ultimately ruled the acquisition could continue.
Still, the case could have a chilling effect on Silicon Valley business dealings because it shows that the commission is aiming to “prevent powerful corporations from buying up the technologies of the future,” said Lynn from Open Markets Institute.
“It has a huge effect in terms of behavior,” he said.
For the FTC, the best outcome would be those mergers that never happen and the acquisitions that companies drop because they’re not worth it, said Lynn.
“The thing about antitrust is sometimes something that might look like a loss is actually a victory in all of these other dimensions in terms of sending a signal, establishing deterrence, drawing new bright lines that people will be fearful to cross,” he said.
Along with tech mergers and acquisitions decreasing over the last year, several companies have dropped their deals after the FTC filed a lawsuit.
U.S. chipmaker Nvidia called off its $40 billion acquisition of UK chip designer Arm when the FTC sued and, similarly, weapons and aerospace manufacturer Lockheed Martin tossed its $4.4 billion plan to purchase engine maker Aerojet Rocketdyne.
On the “Right to Repair” front, Apple, Samsung, Google and Microsoft created self-repair programs since the FTC announced it was upping enforcement on repair restrictions.
Khan’s next big battle is the ban on non-compete agreements. Advocates say the agreements benefit companies and hurt workers because they prevent employees from easily switching jobs.
Several major tech companies require the agreements – and like Khan’s other actions, this stance is already causing a stir.