This analysis was first published in SvD Näringsliv, in Swedish, on July 3rd, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
34-year-old Lina Khan is the lawyer who has made Silicon Valley companies tremble. With a single article, she has turned how competition law is applied completely on its head.
“Do you ever get angry? Is there anything that makes you furious?”
The British law student Lina Khan was interviewing for a job at a think tank in Washington DC. Khan replied that she rarely got particularly angry. The interviewer said that the job — which she was about to get — might change that.
The think tank worked on competition issues and how market monopolies could both suppress wages and stifle innovation. Within just a year in the role, the promised anger began to emerge. Why were politicians doing nothing to stop this?
Khan channeled her frustration into a remarkable career — one that has come to redefine how the United States views competition policy.
Now — as head of the American competition authority the FTC — she is the gatekeeper who ensures that tech companies stay in line.
Microsoft’s $68.7 billion acquisition of Activision Blizzard? Khan sued Microsoft to try to block the deal.
Complicated subscriptions at Amazon? Khan sued the giant to make it easier for customers to cancel.
Meta has essentially stopped making acquisitions since Khan took office. It is generally understood that the chances of them getting a major deal approved are very slim.
Khan is a major force, and together with the EU’s Margrethe Vestager, she is one of the two people with the single greatest influence over the strategies of the tech giants.
It all started with a single article.
At 27, Khan was back as a student, this time at the prestigious Yale University. There she published an academic paper in the school’s journal, The Yale Law Journal.
The title was “Amazon’s Antitrust Paradox” — a nod to the 1978 book The Antitrust Paradox. In it, the lawyer Robert Bork argued, very simply, that the only thing that mattered in competition issues was whether prices went up for consumers. If they did not, there was no problem with competition or monopoly.
Khan’s article argued for the exact opposite.
Over nearly 100 pages, Khan described how even if consumers are satisfied, there can be problems in the longer term. For instance, the data Amazon collects could come to be worth more than if the company had charged more for its products. The consumer experiences no problem in the here and now. But over time, Amazon — with its data reserves — becomes so powerful that it may become difficult for others to compete.
At a time when tech companies were offering a great many services for free, this was a new and radical idea. The price that customers — and by extension, society — paid could come to be considerably higher than it first appeared.
Her position has its critics, of course. Within academia there are researchers who believe her article and definitions are flawed. But the biggest critics come, perhaps unsurprisingly, from the tech companies themselves.
Both Amazon and Meta have tried to argue that Khan cannot be impartial with regard to them, and should therefore not be permitted to participate in proceedings involving them. So far this has not succeeded — and Khan has held her ground.
Amazon is reportedly under investigation in the US for exactly these kinds of competition violations, though nothing official has been presented yet.
For a public official, Lina Khan has an unusually principled approach. In the US, potential competition violations must go through the legal system to have any effect. Generally, institutions like these do not bring cases to court unless they are very confident of winning.
Khan takes a different approach. She has said she may lose some of her cases, but that the process can clarify how this type of legislation should be applied.
While the US works through these questions, the market for large corporate acquisitions has come to a near standstill. The tech giants do not dare invest large amounts of time and money in major acquisitions that then risk getting stuck with competition authorities.
Lina Khan has even gone so far as to say she is looking at unwinding previously approved acquisitions. That could mean Meta might be required to sell Instagram, or that Google could be forced to sell YouTube.
The tech giants now follow everything that 34-year-old Lina Khan does and says. Since Joe Biden appointed her as head of the FTC in 2021, there has already been a wave of lawsuits and proceedings. But everyone knows that the really big cases are being prepared in Washington DC and have not emerged yet.
In the meantime, the big companies in Silicon Valley are on unstable ground — waiting for Khan’s next move.
