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17 June 2021

Why Lina Khan could be Big Tech’s new worst enemy

Newly appointed as chair of the FTC, the 32-year-old competition lawyer has become the face of America's “hipster antitrust” movement.

By Oscar Williams

When Lina Khan takes over as chair of the Federal Trade Commission (FTC) this summer, the 32-year-old antitrust lawyer will be the youngest person to lead the regulator in its 106-year history. She may also be the most radical.

Over the last five years, Khan has become the public face of the “hipster antitrust” movement – a group of young competition lawyers who believe that Americas existing antitrust regime is unfit for the digital age. Her appointment is a statement of intent by the Biden administration that it is serious about reining in the tech giants.

Born in Britain, Khan rose to prominence in January 2017 when the Yale Law Journal published her essay “Amazon’s Antitrust Paradox”. The article was a blockbuster treatise on the dangers of modern competition law and its extreme focus on consumer pricing. Khan has argued that measuring competition solely by assessing the price of goods has allowed a small number of Silicon Valley giants to evade antitrust scrutiny and accumulate unprecedented levels of power and wealth.

“Even when services are good for consumers, they can hurt a whole set of other interests – be it workers, be it business formation, be it democracy at large,” Khan told the BBC in January.

Amazon, Khan has argued, defied the conventional wisdom that companies would always prioritise profit over growth. Instead, the company operated at a loss for most of its history by driving down prices in order to dominate markets, with deleterious consequences for a number of industries. Concerned by such practices, Khan wants to reform antitrust regulation.

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One of the targets of her ire is vertical integration – the process by which companies such as Amazon sell products on platforms or through distribution systems that they also own. Under modern antitrust law, this practice is legal, but Khan has warned that it leads to conflicts of interest, with companies incentivised to provide preferential treatment to their own products over those sold by their rivals.

Since Khans seminal essay was published in 2017, competition regulators in both the US and Europe have become more wary of these practices. In November, the European Commission accused Amazon of encouraging customers to buy products that it supplied itself, or were supplied by other firms that depended on Amazon’s distribution services.

“These firms control the core infrastructure for both commerce and communications and they are providing very valuable services, but it also means you have a small group of private executives that are setting the rules on who gets to use the infrastructure and on what terms,” Khan said in the BBC interview. “That approach is historically at odds with how we’ve treated infrastructure, which has always been accountable to public rules and has had to meet a higher set of regulations.”

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In December, the FTC announced that it was suing Facebook for anticompetitive conduct and that it would push for the company to be broken up. In order to reintroduce competition into the market, the regulator has called on a court to force the company to sell off Instagram and WhatsApp, which began as rivals to Facebook but were later acquired by it.

Khans appointment signals that similar court cases involving other such companies are likely to follow in the coming months and years. Silicon Valleys elite will be watching her early moves with trepidation.