FREE FOR ALL: Lina Khan on fighting big tech
The FTC chair tells us about how corporate consolidation rips you off and threatens your freedom — and what to do about it
Today, the U.S. Department of Justice filed an antitrust lawsuit against Apple. Building on years of investigation, the suit claims that the technology giant has used unfair, monopolistic practices to lock users into their devices and platforms — practices that have hurt consumers, kept prices high, and stifled innovation and competition.
The person who’s arguably done the most to reinvigorate government regulation of tech and to rein in corporate consolidation is Federal Trade Commission chair Lina Khan, the trailblazing antitrust scholar who Biden named to head the agency in 2021. The DOJ lawsuit against Apple is headed up by Jonathan Kanter, the assistant attorney general and an intellectual ally of Khan’s who has brought a similarly aggressive enforcement approach to the Antitrust Division.
When we think of a crisis of democracy, we tend to think of threats to voting rights and bodily autonomy. But the way freedom is lived for most people on most days, Khan says, is in the economy. The behavior of companies — such as the tech giants that mediate so many things Americans do — greatly shapes whether your experience of the world is freedom or coercion, lightness or weight. And that’s why antitrust matters to everyday citizens — fighting monopoly power, Khan argues, is crucial to reviving democracy and making people freer in their everyday lives.
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Balzac wrote, "Behind every fortune lies a great crime." Setting aside the word "every," which is maybe an exaggeration, what do you think are the defining crimes behind the biggest fortunes of today?
I got my start as a reporter and researcher, and my job was to study how different markets had evolved. I spent time talking to chicken farmers, to book authors, to people across a whole set of markets. And it became clear that, over the last 40 years in the United States, we've seen huge waves of consolidation.
You have millions of consumers, thousands of producers, controlled by a handful of companies. These gatekeepers, these dominant middlemen and intermediaries, they play an important function, but the power they've consolidated allows them to pick winners and losers and to enrich themselves as they extract more and more, both from the producers that are actually making stuff and the consumers that are buying it. They’re creating markets that, to a lot of people, just don't seem fair.
You've seen more and more power consolidated and concentrated, and that power being exercised in ways that make other people poorer and more subject to arbitrary whims, and that make them feel more coerced and less free.
So many people say we're in a crisis of democracy, and it's of course a big crisis of democracy, but it takes place in lots of little places also. I think a lot of people may not understand how this specific work you do fits into a bigger question of democracy versus authoritarianism, power for people versus power for the few.
How people experience freedom in their day-to-day lives often involves their economic relationships and what their engagement is like in our commercial sphere. Some of the chicken farmers that I talked to, for example, were so scared of the processors that they were dependent on that they didn't even want to go speak to the government. The fear of retaliation was undermining their free speech rights — core liberties.
Similarly, we see how the expansion of noncompete clauses locks workers into existing jobs; makes it very difficult for them to freely switch employers. Core liberties, again.
One of the original insights of the anti-monopoly tradition in leading up to the passage of the antitrust laws, was that in the same way that we have checks and balances in our political sphere to guard against concentration of political power, that we similarly needed the antitrust laws to safeguard against concentrations of economic power. It was recognized that you really need safeguards on both sides to create real liberty and real democracy.
I wonder how broadly you think about your mandate to regulate tech companies when it comes not just to what we might think of as traditionally deceptive practices, but really corroding democratic participation, the belief in reality, and things like that which might seem a little more ethereal to people.
As law enforcers, we are limited by what the laws say, so the laws that prohibit unfair deceptive practices or unfair methods of competition are really our north star as we're figuring out, "What's a law violation here?"
One of the trends that we've seen in the broader media ecosystem is consolidation, where the independent press and independent journalists are really facing serious existential crises. And from the perspective of a policymaker, it's quite clear that the trajectory we've seen there was not an inevitability. It was the result of policy choices that allowed a relatively small number of firms to concentrate control over digital advertising, and over the dissemination of news and information in ways that has rendered publishers and independent journalists much more dependent on a handful of companies.
I think we've also seen — and this involves the FTC's consumer protection work — how business models premised on endlessly vacuuming up people's data and wanting to promote engagement can create incentives that are at odds with what's good for the public as a whole. They lead firms to privilege content of lesser quality at the expense of higher-quality information, to adopt core business models that prioritize things like, “How do we surveil as many people as we can? Collect as much intimate data as we can?”
That creates all sorts of downstream risks. People's sensitive data about their geolocation, their health, their browsing history is easily sold and bought and trafficked by data brokers. There's been research showing that foreign adversaries have been able to buy data on U.S. veterans and military members.
There are so many hidden risks in this ecosystem, and we're now seeing policymakers really grapple with this and try to fix it
What do you think is the biggest source of anti-competitive behavior out there that you don't currently have the power to regulate because of what the law is?
There are several lawsuits underway against these dominant digital platforms, like Facebook and Amazon. So depending on what the court ends up determining there, we'll send a signal to Congress about where the law might further need to be fixed.
One of the real limitations we face at the FTC is that we can't get money back for people, even when money's been wrongfully taken by monopolies. So if you have a pharma monopoly, for example, that through all sorts of anti-competitive tactics lifts millions or billions of dollars from people, we can go into court and ask the court to stop those practices, but we can't actually get the money back.
And so that can create a real incentive problem. Lawbreakers are able to profit from lawbreaking, and if they get caught, a court will say, "OK, stop," but we're not actually able to make the victims whole and make sure that those companies have to give up their unlawfully gained profit. So how do you stop the cheating? Ensuring that the cheaters can't profit from cheating is a key part of that, and so that's where I would say strengthening the law is quite important.
For everyday folks reading this who may not understand the more esoteric parts of law, what does the world look like when you win? What does work look like? How is work different? How is going to the store different?
Last year, the FTC saw that the companies producing medical products like inhalers and EpiPens were earning margins as high as 80, 90 percent. People were paying hundreds of dollars for these products that have been around for decades. So we took a closer look, determined that we thought companies were improperly or illegitimately listing patents for some of these devices, and sent out letters to them saying so. As a result, some of these companies dropped their patents. Just last week, we had a major producer of asthma inhalers announce that not only had it dropped its patents, but it was now bringing down the price of its inhalers to $35 across the board. That’s down from anywhere between $300 to $800. That's a big win.
We’ve recently introduced a rule that would eliminate junk fees, those pesky “service fees” or “convenience fees” that show up right at the end of a transaction. The FTC also proposed a rule that would require companies to make it as easy to cancel a subscription as it is to sign up.
As the FTC was reviewing a major grocery merger, I had the chance to go around the country and do these listening sessions, hearing from people who were very concerned about how their grocery bills would go up. People would bring the sale circulars from these two competitors and tell me, "Look, right now these companies are competing on the price of milk, competing on the price of strawberries. If you allow them to merge, I'm going to be paying tens of dollars more a week for groceries, and for me, that could be the difference between whether I make rent or not." So this is about real dollars from real people and a question of whether we're allowing monopolies to extract people's hard-earned money just because they can.
It all gets at this basic way in which people all too often have to navigate an economy where they're not getting a fair shake, and there's just this basic indignity in being a consumer sometimes because you’re just getting nickel-and-dimed. All of these pain points really add up for people and I think make the difference between whether they feel like they're living in an economy where they feel a sense of freedom, or one where they have to look around every corner and make sure that they're not being preyed upon.
What you’re describing is what a lot of political scientists have found, which is that we live in a very low-trust society right now. Not just in how we feel towards companies, but in whether we trust anyone. Does what starts as unfair business practices metastasize into a broader culture of how we relate to each other, whether we trust one another? And what hope do you have that this work can change that?
At an individual level, these types of business practices really shape people's experience of citizenship, their experience in our economy. It really adds up if people feel like they're getting messed around or being preyed upon or being coerced. That really shapes how they experience America on a day-to-day level.
That's why the FTC's work is so important, and that's also why it's really important for us to be able to show people what it means for government to be fighting for them, for the public. Especially fighting for people who don't have somebody in their corner, people who are low income, people who are working multiple jobs, people who are the most vulnerable in our economy.
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