Biden Antitrust Pick Is an Expert on How to Break Up Big Tech

Biden is appointing a prominent antitrust scholar to a federal agency that likely won't be able to enact her bold vision without big changes
March 24, 2021, 3:45pm
Biden Antitrust Pick Is an Expert on How to Break Up Big Tech

On Monday, Biden nominated Columbia Law School professor Lina Khan to join the Federal Trade Commission as one of its three Democratic commissioners. Khan has emerged in the past few years as one of the more prominent progressive voices advocating for aggressive antitrust action.

Khan will replace Rohit Chopra, who Biden has chosen to run the Consumer Financial Protection Bureau and who Khan worked for as a legal fellow in 2018. Over the past few years, Khan has served in increasingly prominent roles in antitrust debate and policy formation. She served as legal counsel to the U.S. House Judiciary’s antitrust subcommittee, where she was one of the key architects of its damning report on how digital platforms were flagrantly anticompetitive

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Now, with her nomination to the FTC, as well as that of fellow antitrust advocate and Columbia Law School professor Tim Wu to the National Economic Council, there is hope that Biden is signaling that his antitrust agenda will be an aggressive one. The reaction to her nomination was near-universal praise from antitrust scholars recognizing her impact, the focus of her work, and hope for the future.

"A generation hence, today will be remembered as one of the most important days in the fight to preserve and rebuild American democracy," the Open Markets Institute said in a press release. "President Biden demonstrated a true commitment to restoring the people's control over the American political economy by nominating Lina Khan to serve on the FTC.”

"She's not just brilliant and kind and incisive, she works unbelievably hard and listens harder," Fordham law School professor Zephyr Teachout wrote on Twitter. In an interview with NPR, Senator Amy Klobuchar, who is now chair of the Senate's antitrust committee, said "What I think is exciting about people like Tim Wu and Lina Khan is they're disrupters. I say we need some disruption right now, both in how we look at this in government, and how we can get more competitors going."

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Khan has not shied away from harsh criticism of the most powerful corporations in America, and the world. 

In “Amazon’s Antitrust Paradox,” a 2017 Yale Law Journal note, Khan lays out how Amazon aggressively pursues anticompetitive practices like predatory pricing and vertical integration to the point where it is so dominant that it is considered essential infrastructure for other businesses. Amazon’s case, she writes, shows how antitrust law is inadequate and indeed that “Amazon has marched toward monopoly by singing the tune of contemporary antitrust.”

A 2019 Columbia Law Review article titled "The Separation of Platforms and Commerce" centered on structural separation as a "key antitrust remedy in network industries.''  This would prohibit businesses from competing in sectors or platforms they already dominate or own, preventing them leveraging their position for an anticompetitive advantage. For example, that might look like Amazon being banned from both owning an e-commerce platform and selling its own goods and services on that same e-commerce platform. Building on her 2017 note, Khan advocates for this remedy as well as abandoning the consumer welfare standard (where Amazon’s predatory pricing would be considered “loss-leading”) and embracing one based on preserving competition. 

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As an agency, the FTC is largely concerned with investigating claims of anti-competitive practices and enforcing federal antitrust law, but within the framework of consumer welfare. The question is: can the FTC actually achieve what Khan wants and has spent most of her time advocating for? 

"It could be huge, but it does depend critically on the third D," Hal Singer, an antitrust economist and professor at Georgetown University told Motherboard, "If it's someone in the Obama mold, then Lina and other true anti-monopolists could be thwarted."

Earlier in March, Leah Nylen reported for Politico that the Obama-era FTC simply refused to enforce antitrust law even when they had evidence Google was clearly violating it. According to the report, the FTC uncovered anticompetitive business practices designed to support Google’s search dominance. But instead of acting on it, they came up with a rationale to excuse the behavior that leaned on laughably bad predictions about the future and saw only a “limited potential for growth” in the digital ad space. 

This matches other post-mortems of the Obama administration’s antitrust regime, which antitrust advocates like the American Economic Liberties Project have sketched out as a failure. In its own report on the administration’s antitrust enforcement, the think tank summarized the approach as dominated by “enforcers carrying the consumer welfare banner” who “subverted President Obama’s public pledges to structure markets to be fairer and more stable.”

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The uncertainty of the third appointee and the risk of an Obama-era hangover likely mean that Khan will need backup if she’s to act on her stated beliefs and push the agency back towards real antitrust regulation and enforcement, rather than behavioral remedies such as meager fines.

"Antitrust law is fairly hostile to enforcement, whether brought by the agencies or private plaintiffs," Singer added. "So even the most anti-monopolist appointee will be constrained without support from Congress."

One solution to this potential bottleneck that doesn’t rely on Congress was laid out by the Open Markets Institute in 2018 while Khan was the legal policy director: Section 5 of the FTC Act. Section 5, the institute argued, gives the agency "exceptional power to make and remake antitrust policy" through an expansive prong regarding competition. The agency just needs to use it. 

Section 5 not only declares "unfair methods of competition in or affecting commerce" to be illegal, but avoids the pitfalls of other antitrust laws like the Sherman and Clayton Acts: the FTC, not the courts, is the primary interpreter thanks to authority delegated by Congress. The FTC, the organization argued, must use Section 5 to "overthrow the ahistorical consumer welfare approach to antitrust" and begin real antitrust enforcement by, for example, banning "horizontal and vertical consolidation in concentrated markets and exclusionary practices"

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In her 2019 piece and in a 2020 essay co-written with former FTC Commissioner Chopra, Khan wrote that the FTC could pursue structural separation with or without Congress, although it would be much easier with support.  With congressional support, the path would be much easier as lawmakers could empower the FTC to pursue and enforce structural separation in a way resembling Glass-Steagall’s separation of commercial and investment banking. Without Congress, the path is "significantly more challenging" as it would require the FTC to pursue rulemaking with tools that have been weakened over time, within a legal system that is hostile in general to antitrust enforcement, and through cases with a limited scope that would end up "costlier, and take significantly longer" thanks to the high burdens of proof placed on plaintiffs to successfully show anticompetitive practices are ongoing and harmful.

For Khan, all of this could be possible if the stars align: If Congress supports her vision, if the third FTC Democratic Commissioner is aligned with her, and if Biden gets out of the way. On Tuesday, nearly 30 progressive groups urged Biden to do just this and nominate "aggressive antitrust enforcers" to key positions in the FTC and DOJ to "make a clean break from past leadership" of the Obama administration's antitrust regime.

"I worry a lot of Congress is afraid to make the cut themselves, that they don't want to be the one saying 'OK Amazon can do this, but it can't do that,'" Singer told Motherboard. "Another option is you tell them there's a huge problem, structural separation is the remedy, but rather than them making the cut, they can empower some tribunal in the FTC that's tasked with hearing these complaints to make the cut itself."

No matter what, Khan’s appointment is a big deal and her connections to legislators involved with crafting the Congressional side of antitrust policy is significant. If they work with her, listen to her ideas, and give her the power to enact them, we might see the beginning of a very exciting and robust set of policies that could radically alter the digital world and kill a few monopolies along the way.

But if they don’t, or if another commissioner is hostile to this idea, then it may be that Biden has figured out a smart way to offer a fig leaf to progressives and antimonopolists without actually moving against the business executives, lobbyists, and monopolists who staffed his transition team, are filling his administration’s ranks, or angling for a way to influence policy.