PRESIDENT Joe Biden’s plan to put two progressive antitrust scholars in top positions signals an aggressive approach to combating corporate consolidation and monopoly power, especially that wielded by technology giants such as Alphabet, Inc.’s Google and Facebook, Inc.
Biden’s team is vetting Lina Khan, a Columbia Law School professor who specializes in antitrust law, to serve as a member of the Federal Trade Commission (FTC), according to people familiar with the matter. Last week, he named another Columbia law professor, Timothy Wu, to join the National Economic Council as a special assistant on technology and competition policy.
Together, Khan and Wu could push the Biden administration to broaden an ongoing assault on the tech industry that started under former President Donald Trump. Mr. Wu is in a position to influence legislation that could upend the business practices of tech and other large companies. If confirmed, Mr. Khan would likely pressure the FTC to pursue an investigation of Amazon.com, Inc. that began under Trump and write rules that tighten regulation of the tech industry.
In addition, they would be able to influence how competition policy is applied to industries across the economy. Many antitrust experts are pushing for a broad rethinking of competition policy amid growing recognition that the US has failed to tackle the power of dominant companies in numerous industries, including airlines, mobile phone and internet services, and agriculture.
Both Khan and Wu have been outspoken advocates for vigorous antitrust enforcement against US tech companies. They are part of a group of antitrust thinkers who argue that the current playbook for policing mergers and anti-competitive conduct has fallen short and want to return antitrust policy to its early 20th-century roots — when regulators went after monopolies in railroads and oil.
“It’s a major step,” said William Kovacic, a professor at the George Washington University Law School and a former FTC commissioner. “It’s another sign of the extraordinary success that the advocates of transformation have had in changing the debate and changing the policy-making context. Just extraordinary. I don’t even think they foresaw that this would happen five years ago.”
While Wu and Khan will be influential, Mr. Biden has yet to nominate people for the most important antitrust positions — the chair of the FTC and the head of the Justice Department’s antitrust division, who will oversee the case brought against Google last year and will decide whether to bring additional cases against tech companies. The division is investigating Apple, Inc. over App Store practices.
Mr. Kovacic said the choice of who will lead the Justice Department’s antitrust division is crucial. “Is that more of a traditionalist? Or is there going to be a deliberate effort here to create a debate, create tension?” he said.
In her early thirties, Ms. Khan already has served in influential roles as an adviser to regulators and lawmakers, having burst onto the antitrust scene with a groundbreaking analysis of Amazon published in 2017. That paper cast the online retail behemoth as a harmful monopoly that’s destroying small businesses.
In her paper, Ms. Khan painstakingly built a case that Amazon employs practices that should provoke a rethink of antitrust enforcement in the US.
“The company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it,” she wrote. “Elements of the firm’s structure and conduct pose anticompetitive concerns — yet it has escaped antitrust scrutiny.”
The FBI is conducting a background check on Ms. Khan, which is routine for political nominees, according to a person familiar with the matter. The White House and Ms. Khan didn’t respond to requests for comment. Politico reported earlier on the plan to nominate Ms. Khan.
The Khan and Wu appointments come as the internet platforms are facing a reckoning in Washington that could transform the industry. The FTC is already seeking to break up Facebook, and Ms. Khan could be instrumental in shaping a potential case against Amazon. Mr. Wu is likely to have a say over legislation that could put guardrails on how tech companies operate. Lawmakers are considering reforms to antitrust law that would make it harder for tech companies to buy rivals and are developing proposals to impose rules to protect the privacy of users and change liability protections that the companies prize.
“This is not good for the platforms,” said Herb Hovenkamp, an antitrust law professor at the University of Pennsylvania. “There’s clearly not going to be any let up from the Trump administration to the Biden administration.”
The American Economic Liberties Project, an anti-monopoly group closely aligned with Ms. Khan’s point of view, said Mr. Biden must appoint aggressive enforcers to the Justice Department and the other open FTC seat.
“The Biden-Harris administration needs to turn the page on the ideology and policies that brought us to the brink,” Sarah Miller, the group’s executive director, said in a statement.
Ms. Khan would take over one of five seats on the FTC, which is being run by Acting Chairwoman Rebecca Kelly Slaughter. While enforcement decisions require a majority vote, the chair of the agency wields significant power.
Khan and Wu advocate a new view of antitrust enforcement that upends the framework the US has been using to assess antitrust harm for decades. Often called the “New Brandeis School” after former Supreme Court Justice Louis Brandeis, proponents of this approach want to recast merger analysis by focusing not just on price increases, but also on stagnant wages, innovation, income inequality and privacy rights.
“With the nomination of Lina Khan, the Biden administration has signaled that antitrust enforcement and important competition policy changes will be a high priority,” said Charlotte Slaiman, competition policy director at Public Knowledge. “Khan has already had an incredible impact, pushing the competition policy discussion in the right direction with her work.”
Defenders of the tech industry criticized Khan’s pending selection. The Information Technology and Innovation Foundation, which is funded by companies including Google, Facebook, and Amazon, said Ms. Khan’s “antitrust populism threatens to derail traditional enforcement of antitrust laws.”
“Her writings and opinions reveal a strong preference for smaller, less efficient, less innovative rivals at the expense of objective and principled enforcement of antitrust laws,” Aurelien Portuese, ITIF’s director of antitrust and innovation policy, said in a statement. “In a time of intense competition with China’s rising economic and technological power, the self-inflicted harm of Khan’s brand of antitrust populism will harm US companies and consumers to the benefit of foreign rivals.
Republican Senator Mike Lee of Utah, who sits on the Judiciary Committee’s antitrust panel, called Ms. Khan’s likely nomination “deeply concerning” and described her views on antitrust “wildly out of step with a prudent approach to the law.”
“Nominating Ms. Khan would signal that President Biden intends to put ideology and politics ahead of competent antitrust enforcement,” Mr. Lee said in a statement.
The nominations underscore that Mr. Biden is abandoning the antitrust playbook of the Obama administration, which took a largely hands-off approach to enforcement in the technology sector.
While Barack Obama’s Justice Department stopped several high-profile mergers, it approved others that were criticized as worsening competition, such as the tie-up of American Airlines Group, Inc. and US Airways. The FTC under Obama approved Facebook’s acquisitions of Instagram and WhatsApp and closed an investigation of Google into its search operations in 2013 without any action.
Khan recently served as an aide to FTC Commissioner Rohit Chopra and did stints at the New America Foundation and its spin-off, the Open Markets Institute. She was also counsel to the House Judiciary Committee’s antitrust panel, which conducted a 16-month investigation into tech companies that determined that the biggest internet platforms have all abused their gatekeeper power over the digital economy. The panel, led by Rhode Island Democrat David Cicilline, is preparing to introduce legislation to reform antitrust laws.
The committee’s report recommended a series of far-reaching antitrust reforms, including a measure that would prohibit a dominant tech platform from operating in competition with the firms dependent on it — much the way banking laws once barred large lenders from acquiring insurers, real estate firms, and other non-banking companies. The committee also recommended restrictions on acquisitions by dominant firms. — Bloomberg
