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How FTC Chair Lina Khan wants to modernize the watchdog agency

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Federal Trade Commission Chair Lina M. Khan testifies during a Senate Commerce, Science, and Transportation Committee nomination hearing on Capitol Hill on April 21, 2021 in Washington, DC., when Khan was only a nominee for the position

WASHINGTON, DC - APRIL 21: FTC Commissioner nominee Lina M. Khan testifies during a Senate Commerce, Science, and Transportation Committee nomination hearing on Capitol Hill on April 21, 2021 in Washington, DC. Nelson was a senator representing Florida from 2001-2019. (Photo by Graeme Jennings-Pool/Getty Images)

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One of the big players in the push to update tech industry regulations is the Federal Trade Commission, whose job is to protect consumers and promote competition in the economy.

It’s been just over a year since Lina Khan took over as chair and about a month since the confirmation of a third Democrat, Alvaro Bedoya, to the five-member commission, which broke a prolonged deadlock at the agency.

That means Khan has a fresh chance to advance her agenda.

Marketplace’s Kimberly Adams recently spoke with Khan at her office and asked her about taking on Big Tech in the courts. The following is an edited transcript of their conversation.

Lina Khan: We always want to win the cases that we’re bringing. That said, it’s no secret that in certain areas, you know, there’s still work to be done to fully explain to courts how our existing laws and existing authorities, which go back over 100 years, apply in new context. But of course, we always want to be signaling and making very clear to the market when we think that there is illegal conduct happening in the marketplace. And I think there can be a serious cost of inaction. So we really have a bias in favor of action. And of course, we want to always be winning the cases we’re bringing.

Kimberly Adams: When you’re talking about sort of these older frameworks structuring our modern world, you know, if you’re looking at antitrust law, one of the key ways that that was determined in the past was what it did to consumer prices. And now in many ways, the consumer is the product and our data is the product, especially for so many of these tech companies. When you have such a shift, how does that shape your strategy around anti-competitive practices?

Khan: Some of the concerns are evergreen, right? I mean, the foundational concerns that led to some of the passage of some of the antitrust laws was around the control that a small number of railroads had come to capture over key arteries of commerce across the United States. Those are dynamics that we see today, as well. When you have dominant firms, dominant intermediaries, or middlemen that have come to capture control over key arteries of commerce or communication, that type of power really can do a lot of harm and lead to a lot of abuses. The FTC filed a lawsuit against Facebook. And in that lawsuit, we note that one of the harms that resulted from Facebook’s illegal behavior was a loss in user privacy. And so that’s an instance where inasmuch as data privacy is a relatively newer type of harm that we’re seeing in some of these newer markets, we’re explaining to the courts why we think they should be taking that seriously.

Adams: And many of your, shall we say, “un-supporters” have said that this is not the role of the FTC, that data privacy legislation needs to come from Congress and that the FTC should stay out of it. Why do you think this is the agency’s job?

Khan: Look, the FTC has been on the front lines of data privacy for decades. If firms are engaging in privacy violations that undermine or break the existing laws, we’re going to enforce those laws.

Adams: We are experiencing record inflation. We just had [Federal Reserve] Chair Powell raise interest rates again. In that body of work that you have accumulated before you even came here, you talk a lot about how consolidation in various industries contributes to higher prices. How much of a role do you think market consolidation is playing in the inflation that we’re seeing now? And is there anything that the FTC can do about it?

Khan: Look, I think there’s a very robust conversation around the various causes of inflation and the various factors that are driving inflation. Some of those factors are tied to, you know, various disruptions that occurred spurred by the COVID pandemic. I think another factor that we have seen contribute is the way in which our supply chains have become much more brittle. So the ways in which consolidation and concentration has meant that in certain cases, we’ve put all our eggs in one basket. And as a result, when you have a particular type of shock, or a particular type of disruption, that can lead to these cascading disruptions. One trend has been to really focus on short-term effects on consumer prices at the expense of potentially thinking about broader resiliency of the market. And so one thing that we’re looking to do is think about resiliency. Just last year, the FTC sued to block a merger between Nvidia and Arm, which involves key semiconductor equipment. We thought that type of lawsuit was really important to make sure that with these key inputs and key technologies, we have markets that are open, that are competitive, that are really positioning us to be resilient.

Adams: That gets to my next question because semiconductors was on my list with industries like baby formula, meat, tampons — all these areas where we’re having shortages, with just a few companies operating in these spaces. Are you planning to do anything more like what you did with Arm and Nvidia, to try to either disperse the control in these industries or to prevent them from being more consolidated?

Khan: So we have a couple of inquiries underway. Just a few months ago, we initiated an inquiry into supply chain disruptions. One thing that we’ve heard about, especially from small businesses, from independent businesses, is that there might be economic discrimination happening in the marketplace that could be worsening or exacerbating the supply chain disruptions. We also, just a few weeks ago, launched an inquiry into the infant formula crisis to try to understand, how did we get here? What are the factors that contributed to this? And how do we make sure that for other essential, lifesaving goods and services that we are not replicating the situation where a single company or a single factory going offline can just lead to such disruption. We’re also stepping back and doing a bigger reset. So both the FTC and the [Department of Justice] are currently revising what are known as the merger guidelines. This is basically our enforcement manual for how we identify unlawful deals. This is another area where incorporating more of those concerns around resiliency can also really equip us for the long term.

Adams: I saw that you’re coming up on your fifth listening session for that. And I was looking at the comments because I do love the Federal Register. And I saw that you had, like, 5,000 comments, more than 1,000 of those publicly posted. Given all this feedback that you’re receiving in the listening sessions, in the comments from stakeholders, how has that informed what you think the final new guidelines are going to look like?

Khan: Well, these listening sessions have been incredibly valuable. We’ve heard from market participants across the country, across sectors. So we heard from farmers, we heard from nurses, we heard from media producers, we heard from startups and entrepreneurs in the tech space, who are speaking to the ways in which consolidation can really close off markets, can make it difficult to enter, can make it difficult to compete on a level playing field. So really, it’s led to a deeper appreciation for the real costs and the real harms that can emerge from these types of mergers and acquisitions. And really a mandate for us to make sure that our tools and our enforcement manual is fully reflecting that history and that experience, to make sure that we’re not allowing unlawful deals to transpire and harm Americans.

Adams: Do you have a sense of when we’ll see draft guidelines yet?

Khan: We’re hoping that in the coming months we’ll be able to post draft guidelines and be able to get comments on those before we move forward with the final set.

Adams: Coming months, like three months? Six months?

Khan: Within this calendar year.

The FTC has been busy. On Thursday, the agency issued a report to Congress about the risks of relying on artificial intelligence to solve “online problems.”

What are some examples of online problems, you may ask. Well, the report includes a pretty grimy list — content that is deceptive, fraudulent, manipulated, or illegal like scams, deepfakes, fake reviews, opioid sales, child sexual exploitation, revenge pornography, harassment, hate crimes, and the glorification or incitement of violence like the Jan. 6, 2021, insurrection.

Before Khan became chair of the FTC, she was a legal scholar who wrote about antitrust enforcement, arguing it should shift away from “exclusive reliance on case-by-case” lawsuits and focus instead on revising the rules to address violations systemically. That’s pretty much what she’s trying to do now as the agency’s leader.

Khan co-authored a 2020 paper on the subject, published in the University of Chicago Law Review. The other author just so happens to be Rohit Chopra, a former FTC commissioner himself and now director of the Consumer Financial Protection Bureau.

I also spoke with Chopra about how that agency is approaching tech regulation, particularly when it comes to data collection.

And that final listening forum I mentioned, when the FTC will be taking in more public comments on updating merger-and-acquisition guidelines, is set for Tuesday.

And in case you want to personally weigh in on how the agency should handle mergers, acquisitions and litigation — especially when it involves the massive companies behind our technological apps and services — you can sign up here.

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