5 Important Things About Big Tech

Leena Khan has given her first on-camera interview since being named chair of the Federal Trade Commission. In it, the legal scholar, who has previously exhorted companies like Amazon to work around antitrust laws to reduce competitors and expand into new territory, spoke about the current status of the commission. Below are five takeaways from him: Conversation With CNBC’s Aaron Sorkin new York Times Columnist Kara Swisher.

agency is underfunded

“We are seriously under-resourced,” Khan said of the FTC. There are currently 1,100 people working for the commission, which he says was about two-thirds of the workforce in the 1980s. This means that the agency will have to make tradeoffs in terms of which cases to pursue. “We have to make a very difficult choice as to which billion-dollar deals we are going to make sure that we are scrutinized,” she said.

Khan says it will be important to pick cases that have a massive impact on the market and ultimately deter companies from engaging in anti-competitive behavior. That said, more funding would go a long way in helping the agency do its job, she says. ,a bipartisan bill Senators Amy Klobuchar and Chuck Grassley could raise money to the agency for merger filings if the agency passes.)

It is redefining ‘loss’

“Some of the metrics used over the past decades haven’t really captured the full architecture of market power that we are seeing and how it is being exercised,” she says. “So the main question for me is really how do we make sure that our equipment and our structures and the way we’re enforcing the law match the world we’re living in here.”

One example she points to is how unions supported the merger because they believed the downstream effect would be a net positive for workers. Now, she says there is evidence the merger could have a greater impact on workers. “We started looking through examples of retrospective studies where the merger actually had a detrimental effect,” she said. “That’s what’s contributing to that reappraisal.”

Another phenomenon the agency is investigating are instances in which it may not be clear that market power is being used to drive prices up. One can imagine, she says, how an inflationary environment can cover companies that exploit their monopoly power. “If prices are moving around them, they can either increase prices unilaterally or in a coordinated manner that may not be readily detectable.”

Another example she cites is how market consolidation may have helped create an existing disrupted supply chain. “Capacity has been reduced and the whole system can become less resilient as a result, so when there is some type of shock, some type of disruption, whether it is a natural disaster or a global pandemic, we are not able to respond quickly. And that could lead to some sort of price hike,” she says.

It’s not all about the technology

While technical executives criticize the FTC for being targeted in antitrust complaints, “the implication in that criticism is that the FTC is focused solely on this industry at the expense of others,” Khan says. “The idea that it’s somehow tech-focused really misses the broader picture, which is that we’ve seen consolidation in the economy in a more systematic way and that both the DOJ and the FTC are taking it as a whole.” She points to cases of consolidation in healthcare, retail and grocery, as examples.

Congress may have to rewrite the law

Khan noted that although it is currently rewriting guidance surrounding the merger, at the end of the day, the FTC is an enforcement agency. She says there are several questions that lawmakers are currently considering, such as whether it is ethical for companies that have marketplaces to also sell products in that marketplace. “Historically, there have been areas where Congress has set those rules,” she says, pointing to the separation between banks and markets.

Copycat products are on the radar of the FTC

“A reason why [copycat products] There is widespread concern that this could potentially reduce innovation and investment,” she says. “If you’re an entrepreneur and you’re going to bring a product or service to market, but you’re not going to be able to reap the rewards of that investment because someone is going to fit and bundle it in one fell swoop. Is it or take it forward, I think it could raise a broader question – is it an antitrust question looking at specific details.”

However, she thinks it will be important to unravel how this imitation plays a role in reinforcing monopolies as technology moves into the metaverse economy. “We have to make sure that we are thoroughly learning the lessons of the past two decades and applying them to these markets, so we are not allowing incumbents to expand and protect their monopolies that just rivals. coerce and engage in unlawful conduct,” she says.

The agency is holding monthly open meetings where Americans can talk about what they see in the market, a move that Khan hopes will help regulators stay abreast of changes in the market. “We want to be able to hear directly from people,” she says. “I think it’s easy to be disconnected from the problems people face in their daily lives in DC, so it’s important to have that direct channel.”

In the meantime, companies are hoping for a political turnaround. If the midterm elections swing in Republicans’ favor, it could pose an obstacle for the FTC, though Khan says the upcoming antitrust law is bipartisan. Even though this year’s election does not hinder enforcement efforts at the FTC, Khan’s term could end in the 2024 election. “It adds a lot of pressure for us to act fast everyday to move things along,” she said. “Here’s an opportunity to really change and learn from the mistakes of the past and that’s what we’re going to try to do.”