Lina Khan’s nomination to be an FTC Commissioner took an important step forward on April 21 with her testimony before the Senate Commerce Committee. Unsurprisingly, Khan’s testimony underscored her interest in ramping up antitrust scrutiny of large internet platforms.
Khan first rose to prominence in the antitrust world with the publication of her article Amazon’s Antitrust Paradox in the Yale Law Journal in 2016. Khan argues that antitrust standards based on consumer welfare – measured primarily through prices consumers pay – are ill-equipped to protect competition in the digital economy, and have allowed Amazon to become the “titan of twenty-first century commerce.” Her analysis finds that measures of price and output do not serve as effective signals of competition, and focusing on these signals allows predatory pricing and similar strategies to evade enforcement scrutiny. Khan further argues for returning to a greater focus on market structure and how a company’s structural role may inhibit competition. Some members of the Commerce Committee praised Khan’s work, but critics have labeled it as a form of “hipster antitrust” because of its support for reviving doctrines that prevailed in the 1960s (and earlier).
In her opening statement before the Committee, Khan detailed her experience over the last ten years documenting, observing, and analyzing competition issues as a journalist and legal scholar. She emphasized her experience serving as Counsel to the House Antitrust Subcommittee, where she drafted the section of the House Investigation of Competition in Digital Markets Report detailing the rise of Google’s market position in online search and advertising . The House Report concluded that Google leveraged its search dominance through self-preferencing, data misappropriation, raising its costs for market access, and other tactics to weaken competition. The Report warns that, “absent interventions,” barriers to entry and network effects are likely to help protect Google from competition.
During her Commerce Committee hearing, Khan stated that the FTC should closely examine the conduct of technology companies and suggested that allegations in recent lawsuits indicate “potential criminal activity” in digital ad markets. Khan’s testimony also highlighted the privacy impacts, observing that the business model of online advertising itself may be antithetical and possibly harmful to privacy law, and noting that ”companies may treat privacy law violations simply as the cost of doing business.”
Khan’s nomination is just one of the moving pieces at the FTC. President Biden has yet to name a permanent Chair. Commissioner Rohit Chopra has been nominated as Director of the CFPB, and his departure would create another vacancy on the Commission. We will continue to closely monitor developments with Khan’s and other FTC nominations, as the leadership picture in key agencies become clearer.
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