What is it about Lina Khan that attracts so much attention?

16.08.2023

CeCo Chile

Alejandra Palacios P. Afiliada Senior de la Escuela de Gobierno de la Universidad del Sur de California (USC Price School). De septiembre de 2013 a septiembre de 2021 fue Presidenta de la autoridad de competencia en México (Comisión Federal de Competencia Económica, COFECE).

Without a doubt, Lina Khan is the best-known Federal Trade Commission (FTC) Chair ever. For good or for bad, people talk about her like nobody has of previous FTC Chairs: op-eds, podcasts, and public letters from Congress, amongst others.

Her detractors blame her for the deterioration of the working climate within the FTC: for a lack of management skills, incapacity or unwillingness to retain talent within the agency that took years to build, and for not wanting to consider the expert opinion of FTC career staff who are aware of the trial and error of the past. These faults, they say, have crystalized in her taking the FTC to notable losses in court that sought to prevent two Big Tech mergers: Meta/Within and Microsoft/Activision. Antitrust agencies rarely litigate harm in the form of a potential lack of competition between the merging parties, especially considering it a vertical merger case, thus raising questions about her judgment in pursuing cases.

“Within its mandate, the FTC not only protects consumers against monopolization, but it has also increasingly become a leading enforcer in privacy and data protection matters. The need for strengthening antitrust, especially against Big Tech companies, is not a movement taking place in a vacuum”

On the other hand, Khan is a prominent figure who has revitalized antitrust in the US, which is, in my view, super refreshing. For the past 30 years, under the presumption that markets can “self-correct,” the prevailing thinking was for minimal antitrust interventions, creating case law precedent of that line of thinking way up to the Supreme Court. On the contrary, she is part of an intellectual movement known as the Neo-Brandesian school of thought, which proclaims that antirust has been serving the elites instead of the “people”, entrenching monopolies and allowing for market concentration. As such, more aggressive antitrust enforcement is needed. Her “Amazon´s Antitrust Paradox” paper was a shaker to the system.

On the flip side of bringing antitrust to the US public agenda, she has also attracted attention by way of her harsh comments against previous antitrust enforcers in the US for “protecting the elites”. Some of them must have thought that the level of enforcement was acceptable, not because they were serving big business, but rather in absolute intellectual honesty. Others, even in agreeing that more aggressive antitrust is needed, felt hurt. They were not acting dishonestly, but rather likely from an awareness that case law was quite friendly with the business sector.

Regarding her prominence, it is also true that Chair Khan is leading the FTC in a crucial moment in the digital economy. Within its mandate, the FTC not only protects consumers against monopolization, but it has also increasingly become a leading enforcer in privacy and data protection matters. The need for strengthening antitrust, especially against Big Tech companies, is not a movement taking place in a vacuum. There is a general sense that the lack of regulation (or mandatory requirements) in privacy and data security has also resulted in inadequate outcomes for consumers. Competition, consumer, privacy, and data protection issues sometimes mix all together in one case.

Finally, eyes are on Khan because she faces two important challenges, one is self-inflicted, and the other is systemic. Both are intertwined. First, she created expectations about how this new way of thinking of antirust would bring more enforcement and that Big Techs would be tamed. All of us who have worked at antitrust agencies know that building solid cases is everything but easy, a fact that is not necessarily clear from the outside. With the system as is, the burden of proof on the agency is enormous. In monopolization cases, the burden is two-fold, having to demonstrate that the alleged infringer has sufficient market power and that the conduct under investigation is bad for consumers. Apart from the threshold, cases take years to materialize into remedies, as the private parties can defend themselves in many instances. The challenge of trying to move the ship in a new direction and seeing that your efforts have been swallowed up by a system where judicial precedents bind courts is frustrating.

So, the second challenge is modifying those precedents – as case law is the law. Either Congress passes a law to tackle monopolization more efficiently (here, the FTC might consider using its losses in court to demonstrate to Congress the need for new antitrust legislation), or the agency tries to affect the body of law with new jurisprudence. Either way, should FTC enforcement be done with the purpose or intention of developing “good” antitrust law? Yes, I believe so. Antitrust agencies must be bold, although simultaneously careful, to avoid creating bad precedents. The risk of losing cases in courts is creating case law that further undermines the agency’s power and the FTC’s credibility as a law enforcement agency. She is at a tough spot.

As mentioned, courts have recently struck down some FTC enforcement efforts in part because they didn´t demonstrate that the companies under investigation passed the monopoly threshold. Was it a matter of law or a matter of lack of evidence? I don´t know the answer. Some question why the FTC is spending taxpayers’ money on cases with weak evidence and under theories of harm that are difficult for agencies to substantiate in court. While losing cases is onerous, it is also onerous having the FTC (and the DoJ Antitrust Section) condemned to demonstrating on a case-by-case an abuse of dominance power from Big Tech through the arduous process of determining so. Especially, doing so when the experience with Big Techs over the past 15 years has shown that the conduct of certain gatekeepers has hurt the competitive landscape.

The FTC leadership wants to change the state of things. Maybe the forms haven´t been the best, and need adjustments. Congress could also help turn the ship around by passing new legislation. Case by case enforcement, statements, and guidelines can only do much.