Not even a month into her role leading one of the country's most powerful regulatory watchdogs, the new head of the Federal Trade Commission Lina Khan faces her first big challenges: A federal judge on Monday gave the FTC 30 days to rewrite a blockbuster antitrust lawsuit against Facebook, after ruling that the commission had failed to make its case in its first attempt.
And on Wednesday, Amazon requested the FTC recuse Khan from any cases involving the company, citing her previous criticism of it and other big tech firms.
It's a start tailor-made for the lawyer who has dedicated her career to redefining the way American law treats monopoly power, and one that only intensifies the spotlight on Khan on Thursday, as she presides over the FTC's first public meeting of her tenure.
The face of 'hipster antitrust'
At 32, Khan is the youngest FTC chair ever appointed, and has become one of the most prominent voices calling for aggressive curbs on the dominance of big companies.
That movement seeks to return to an earlier, more muscular form of antitrust policy, dating back to the trust-busting Progressive Era. It takes a broad view of the harms caused by giant corporations, not just to consumers but to rival companies, customers, suppliers and the larger economy.
While critics deride it as "hipster antitrust," Khan and other progressives call it "the New Brandeis Movement," in the tradition of Supreme Court Justice Louis Brandeis, who took aim at the "Curse of Bigness" represented by the railroad, steel and oil industries.
Reviving Brandeis's framing is a sharp change from the consensus that has reigned since the 1970s, which zooms in on price, and how companies' behavior alters the prices people pay for products and services.
Khan and others argue this narrow focus on "consumer welfare" gives tech giants in particular a free pass, since most do not charge anything for their products, and ignores how these companies have created the web's dominant platforms, from shopping to search to social networking, and compete on those same platforms.
Their throwback view of monopoly power is now ascendant, after decades in which the darlings of Silicon Valley have enjoyed little regulation. President Biden not only appointed Khan to lead the FTC but also tapped Columbia Law professor Tim Wu, who has compared today's tech giants to the robber barons of the Gilded Age, as special assistant for technology and competition policy at the White House National Economic Council.
"This is a revolutionary moment," said Barry Lynn, the director of the Open Markets Institute, a left-leaning think tank that has helped lead the charge for a new era of trust-busting. "Now we're waking up to the fact that we live in a world in which the monopolists govern, and unless we actually use what tools we have right now, it's kind of all over. Our democracy is over, it's done with."
From Yale Law student to FTC chair in four years
Lynn hired Khan at Open Markets in 2011, when she was just a year out of college. There, she researched consolidation in industries from book publishing to chicken farming.
Khan then went on to law school at Yale, where she made her name in tech policy circles with a seminal 2017 paper titled "Amazon's Antitrust Paradox". She argued that the way antitrust laws are currently interpreted fails to account for the online retail giant's dominance.
She's also no stranger to broader concerns about the power of Big Tech. She worked for FTC commissioner Rohit Chopra, another proponent of more robust antitrust enforcement, and she advised the House Judiciary Committee during its 16-month probe of Apple, Amazon, Facebook and Google. In a report that Khan helped write, the investigation concluded all four tech companies are monopolies and urged for "structural separations" of the companies, including potential breakups.
Lynn says Khan, who most recently was an associate professor at Columbia Law School, will bring those experiences and perspectives to her new role at the FTC.
"Lina's coming to this with a very fresh way of thinking ... that is grounded in the fundamental principles of the American democracy," he said. "The main thing that's going to be different with the FTC is, they're going to be approaching power — concentrations of power, the use of power, the structuring of power, the behavior of large corporations — in the same way that Americans did in the 19th century and in the heart of the 20th century."
But Khan's outspoken critiques have also made her a target for those with more conservative views of competition policy and of the powerful companies she's now charged with regulating.
On Wednesday, Amazon petitioned the FTC to recuse Khan from any matters involving the company, arguing that her previous work and statements "demonstrate that she has prejudged the outcome of matters the FTC may examine during her term."
Bill Kovacic, a former FTC chair, commissioner and general counsel, said the motion was "an unwanted distraction" and that the agency had likely examined the issue "very carefully" when Khan was nominated.
The FTC declined to comment on Amazon's request.
Meeting the FTC's new Facebook challenge
Among the first tasks the FTC will take up under Khan's leadership is likely to be a new salvo against Facebook.
On Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia dismissed the agency's landmark complaint against the social media giant, filed in December. He agreed with Facebook's arguments, saying prosecutors failed to show evidence backing up their claim that the company has a market share of at least 60% in social networking.
"It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist," Boasberg wrote.
The fact that the Facebook case was struck down at such an early stage illustrates the difficulty regulators face under current antitrust law, said Kovacic, the former FTC chair.
"You do not expect to get knocked out of the game in the very first inning," he said. "The judge has given them a very sobering reminder of how hard it will be to succeed with this kind of very difficult case."
Boasberg has given the FTC until July 29 to file an amended complaint addressing his concerns.
The agency could also appeal his ruling. Or, as Politico has reported, it could pursue administrative action — basically, suing Facebook in the FTC's own internal court.
"The FTC is closely reviewing the opinion and assessing the best option forward," said spokesperson Betsy Lordan.
Whichever path the FTC pursues, observers agree on one thing: under Khan's leadership, the agency will not back down from the fight.
"My understanding from looking at the writings of Chair Khan and the community of those who demand transformation of the antitrust system is that it is better to litigate and lose than to watch from the sidelines. So there's a belief that just bringing the case has a deterrent effect," said Kovacic.
Pressure rises for Congress to pass new laws taking on monopolies
Beyond the FTC, the court's ruling has added urgency to efforts already underway in Congress to rewrite antitrust law. The House Judiciary Committee is advancing a bipartisan package of bills that seek to limit big tech companies' gatekeeper power and give the FTC and Justice Department, the other main anti-monopoly enforcer, more muscle.
"This decision underscores the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy," said Democrats Jerrold Nadler of New York and David Cicilline of Rhode Island, who respectively chair the House Judiciary Committee and its antitrust subcommittee, in a joint statement.
For antitrust reformers like Khan, Kovacic said the courtroom defeat is a "vivid demonstration" of their case.
"The reaction is, 'We know these are dominant firms. We know they have substantial market power. We know they abuse that market power. Why are we caught up in the niceties of technical antitrust analysis that talks about how you define a relevant market, prove a market share and demonstrate abusive behavior?'"
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