Will Joe Biden and Lina Khan Cut the Tech Giants Down to Size?

John Cassidy

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Of all the appointments that Joe Biden has made since becoming President, one of the most intriguing came last week, when he named Lina Khan, a thirty-two-year-old associate professor at Columbia Law School, as chair of the Federal Trade Commission, an agency with broad authority to police America’s biggest corporations, including its tech giants. After two decades in which both Democrats and Republicans have mostly taken a light-handed approach to regulating Silicon Valley, Khan’s appointment raises the prospect of a long-overdue drive to reinvigorate the enforcement of antitrust laws and inject more competition into a vital part of the economy that is dominated by a handful of gargantuan incumbents.

Biden elevated Khan immediately after the Senate voted to confirm her as one of the five commissioners who serve on the F.T.C. Despite her relative youth, she is a leading figure in the movement to crack down on abusive monopolies, particularly those in the tech sector, and other antitrust campaigners greeted her promotion with surprise and delight. “If you had asked me six or eight months ago if we could get someone like Lina Khan onto the F.T.C., I would have said, ‘Maybe,’ ” Matt Stoller, the author of the book “Goliath: The 100-Year War Between Monopoly Power and Democracy,” from 2019, told me. “If you had asked me if we could get someone like Lina Khan to be chair of the F.T.C., I would likely have said, ‘Are you totally crazy?’ ”

The daughter of Pakistani immigrants to the United States, Khan first came to public attention in 2017, when, as a student at Yale Law School, she published a lengthy article in the Yale Law Journal which argued that Amazon shouldn’t be excluded from antitrust scrutiny simply because it had a history of cutting prices. To the many retail businesses that have been decimated by Jeff Bezos’s juggernaut, Khan was merely stating the obvious. But her article represented a challenge to the policy orthodoxy that has dominated the world of antitrust law for decades. Originating in the Chicago School of economics and promulgated by conservative jurists such as Robert Bork, this approach emphasizes “consumer welfare,” which judges have interpreted to mean that anticompetitive practices can be justified if they lead to lower prices. Because Amazon charges lower prices than many offline retailers, and because other tech giants, such as Google and Facebook, provide online services for free, they have been largely immune from antitrust enforcement, despite their market dominance. Even as many of the tech giants’ competitors accused them of bullying tactics, such as “predatory pricing”—charging low prices for a time to drive rivals out of business—the U.S regulatory authorities and courts largely discounted these claims. (European regulators have been far tougher on Silicon Valley.)

Rather than engaging in arcane arguments about prices in particular markets, as many antitrust lawsuits have done, Khan took a historical approach. In her article, she pointed out that the creators of America’s bedrock antitrust laws—the Sherman Act of 1890 and the Clayton Act of 1914—had broader goals than reducing prices. “Congress enacted antitrust laws to rein in the power of industrial trusts, the large business organizations that had emerged in the late nineteenth century,” Khan wrote. “Responding to a fear of concentrated power, antitrust sought to distribute it.” She went on to compare Amazon to the vast railroad combines that Cornelius Vanderbilt and other robber barons put together by squeezing out smaller rivals and giving preferential deals to favored customers. The article concluded, “In order to capture these anticompetitive concerns, we should replace the consumer welfare framework with an approach oriented around preserving a competitive process and market structure.”

Khan isn’t the only scholar who has put forward this type of argument. “There is this whole group of people who think differently about antitrust policy, but Lina kind of became the avatar for this new approach,” Felicia Wong, the president and C.E.O. of the Roosevelt Institute, a progressive think tank that has published several reports on rising monopoly power, told me. In 2018, Khan went to work at the F.T.C. for Rohit Chopra, an Obama appointee who favored a more vigorous approach to antitrust enforcement. In 2019, she became a counsel to the House Judiciary antitrust subcommittee, which was investigating the activities of Amazon, Apple, Facebook, and Google.

Last October, the Democratic majority on the subcommittee, led by the Rhode Island congressman David Cicilline, issued a lengthy report that said the four online behemoths “not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them. . . . To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” As a way of restoring competition, the report called for the consideration of “structural separations and prohibitions of certain dominant platforms from operating in adjacent lines of business”—i.e., breakups.

It remains to be seen whether Khan’s appointment will lead to a serious effort to tame the Silicon Valley titans—including, perhaps, an attempt to split them up. Although the statutes grant the F.T.C. broad power to check anticompetitive behavior, the agency has often failed to fully exert its authority. If Khan is to change this, she will need an activist majority on the five-member F.T.C. With Biden in the White House, the Democrats are guaranteed to have three commissioners, but one of them, Chopra, is about to move to another job in the Administration. Some of Khan’s supporters fear that Big Tech lobbyists and pro-business Democrats will exert pressure on the White House to replace Chopra with a commissioner less committed to confronting Silicon Valley.

Another source of uncertainty is the delay in selecting someone to lead the antitrust division of the Justice Department, which historically has taken a leading role in bringing major cases to court, such as a legal battle against Microsoft in 1998. Earlier this year, there were reports that the White House was weighing a few candidates for the post, including two Washington lawyers who have already filed legal challenges to the tech giants’ power: Jonathan Sallet, who played a prominent role in a lawsuit that more than thirty states have brought against Google, and Jonathan Kanter, who has represented online firms that claim to have been victims of Google’s monopoly. In some progressive circles, there are whispers that Merrick Garland, Biden’s Attorney General, might not be fully on board with the Justice Department adopting a more aggressive stance toward Big Tech. Back in January, the Intercept reported that Garland wanted a former lawyer for Facebook to get the antitrust post.

On Capitol Hill, support is growing for imposing at least some restrictions on the tech giants. Earlier this month, House Democrats introduced five different antitrust bills. One of them, which Cicilline sponsored, would prohibit the big online platforms from favoring their own products or services over those of their competitors. Another bill, sponsored by Representative Pramila Jayapal, would go further and ban a tech giant from owning any product or service that operates on its platform. All five bills had Republican co-sponsors—a reflection of the changing political climate. During Khan’s confirmation hearings, Senator Ted Cruz said that he looked forward to working with her, and twenty-one Republican senators ended up voting to confirm her. Of course, the G.O.P.’s turn against Big Tech coincided with the antagonism between Donald Trump and Facebook and Twitter. In the final months of the Trump Administration, the Justice Department issued an antitrust suit against Google, accusing it of using bullying tactics to further entrench its search monopoly, and the F.T.C. sued Facebook for anticompetitive behavior in protecting its dominant position in social media.

In theory, there is now bipartisan support for confronting Big Tech. However, the decisive factor will be how far Biden and his top aides are willing to go down the path that Teddy Roosevelt took more than a century ago, when he used the antitrust laws to break up John D. Rockefeller’s Standard Oil and other monopolies. If the President wants to make a T.R.-size mark on history, he will need to face down Big Tech and other business interests that fear an aggressive revival of antitrust. Silicon Valley lobbyists and their political allies, of course, will argue that Apple and Amazon and Google are world leaders, and that doing anything to harm them will undermine America’s economic power. “The question for the [Big Tech] lobbying teams is—are you going to be able to stop this? Or have your opponents circumvented you?” Bill Kovacic, a former head of the F.T.C. who now teaches at George Washington University, told Recode. “This is a contest of ideas.”

To win this contest, Biden will have to make the argument that—by squashing, intimidating, and buying out their competitors—the Silicon Valley giants are now hindering innovation rather than promoting it. He will also need to make more pathbreaking appointments and lead a sustained, multi-agency effort. “To overturn the Chicago School philosophy, you need a whole-government approach,” Stoller said. It’s a big task. In appointing Khan, Biden has taken an important first step.