FTC nominee Lina Khan calls for more scrutiny of tech giants’ power

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Columbia Law School professor Lina Khan, whom President Joe Biden has nominated to serve on the Federal Trade Commission, told lawmakers antitrust enforcers need to scrutinize the power that large technology companies have over digital markets, from app stores to online journalism.

In testimony before the Senate Commerce Committee Wednesday, Khan called out the dominance that Apple Inc. and Alphabet Inc.’s Google have over app stores on mobile devices, saying terms like Apple taking 30 per cent of the revenue earned by some developers can’t be justified.

“The source of the power is the fact that you have basically these two main options, and so that gives these companies the power to really set the terms in this market,” she said. “Certain terms and conditions really lack any type of beneficial justification, and so I think in those cases we need to be especially skeptical and really look closely.”

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Khan, 32, is Biden’s first nominee to an antitrust enforcement position. Biden has yet to nominate anyone to run the Justice Department’s antitrust division, which shares competition enforcement powers and hasn’t picked a permanent chair to lead the five-member FTC.

Khan came to prominence with a research paper on Amazon.com Inc. that she wrote as a law student at Yale University. That paper casts the online retail giant as a harmful monopoly and argues that the company employs practices that should provoke a rethink of antitrust enforcement in the U.S.

She went on to work as an adviser to FTC Commissioner Rohit Chopra and as a counsel to the House antitrust committee, where she helped author the findings of a 16-month investigation of Apple, Google, Amazon and Facebook Inc. that accused the companies of abusing their gatekeeper power in the digital economy.

Republican Senator Mike Lee of Utah asked whether that work would require Khan to recuse herself from any role investigating the companies if she’s confirmed. Last year the agency sued Facebook for allegedly violating antitrust laws. It has also interviewed merchants about Amazon’s business practices, Bloomberg News has reported. Lee cited a court decision involving a staff member of the Senate’s antitrust panel.

Khan said she has no financial conflicts that would require recusal under federal ethics laws but said she would follow the guidance of ethics officials at the FTC if there is a question about any conflicts.

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During her testimony, Khan said antitrust enforces “missed opportunities” to stop past acquisitions by tech companies because of the mistaken view that digital markets were subject to disruption by new competitors.

“We have to be much more vigilant, related to these acquisitions,” she said. “In hindsight, there’s a growing sense that some of those merger reviews were a missed opportunity.”

In its lawsuit against Facebook, the FTC is seeking to unwind the social-media platform’s acquisitions of WhatsApp in 2014 and Instagram in 2012, which the agency had waved through.

Khan also said that tech platforms are contributing to a “crisis” in local journalism because of their dominance in the digital advertising market and the arbitrary power their algorithms have over publishers.

“Increasingly news publishers are dependent on a few gatekeepers to disseminate their news, disseminate their information, so a single change in an algorithm can plummet readership and subscriptions,” Khan said.

Bloomberg.com