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How much can Lina Khan do to rein in Big Tech?

As Democrats in Washington made their final preparations for an assault on the power of Big Tech, it looked like a decisive one-two punch.

A week ago, the House of Representatives proposed a clutch of new antitrust laws. This followed public hearings and a damning Congressional report last year that owed much to the behind-the-scenes work of Lina Khan, an academic who has been influential in shaping the response to tech power.

Then, this week, it emerged that Khan will become the next head of the Federal Trade Commission, setting her up as one of Washington’s foremost trustbusters.

The natural questions that follow: will Congress follow through with new legislation? If not, will a Khan FTC go it alone in trying to set new rules to rein in the tech giants? And if it does, how much could it hope to achieve under existing antitrust laws?

The legislative agenda is ambitious. Inevitably, most attention has fallen on a bill to break up the big tech companies.

Forcing a complete restructuring of America’s most conspicuously successful — and still generally popular — industry sounds like a tall order, even in a period less riven by partisan politics. A degree of Republican backing for the House bills has been notable. But getting to a filibuster-proof 60 votes in the Senate will be hard.

A less drastic law would prevent the companies giving unfair preference to their own services. This fits closely with the approach that Khan has advocated through her scholarly work, most notably on Amazon, where she showed a preference for non-discrimination rules of the kind applied to essential utilities.

Yet many see little chance of any of this getting into law. There may be a consensus in Washington about restraining the tech companies, but opinions about legislation to do it are all over the map, making it more likely the Biden administration will go for quick action under the existing laws, according to Nicholas Economides, a New York University economics professor.

At the FTC, Khan inherits an action against Facebook and investigation into Amazon. But she made it clear she would prefer to work through regulation rather than the courts. Last year, she co-authored a paper in favour of a significant rethink of how the agency wields its powers to prevent “unfair methods of competition”, advocating sweeping, industry-wide rules. The FTC has already taken steps in this direction, creating a new centralised staff group this year to come up with rulemaking proposals.

There are likely to be other influential voices calling for swift action outside Congress. Tim Wu, a Columbia law school professor (like Khan) who was named an adviser to the White House this year, has been influential in arguing that current laws give the trustbusters some powerful weapons, they just need to be enforced more aggressively.

Not that unilateral regulatory action would be plain sailing. Moving ahead without the backing of Congress would leave Khan politically exposed. Legal challenges would be inevitable. 

Even if the FTC tries to set sweeping new non-discrimination rules for tech platforms, meanwhile, there are serious questions about how effective these could be.

Europe’s efforts on the issue have been underwhelming. These included forcing Microsoft to offer new PC customers a choice of their default internet browser, and requiring Google to prompt Android users to select their preferred search engine. Neither action had any noticeable effect on competition.

How to give internet users real choice on today’s dominant platforms presents huge design challenges. At this stage, it is questionable how many iPhone customers would jump at the chance of using a non-Apple App store, or how many Android users would welcome the choice of a non-Google search engine.

Despite all this, some investors are already looking ahead to an opening up of the platforms that will give a new lease of life to a set of specialised internet services. Since November’s presidential election — and even before Democrats gained narrow control of the Senate — shares in Yelp, the local search company that has been a longtime critic of Google, have more than doubled. Travel company Expedia, another arch-foe of the search company, is up 77 per cent.

Investors in these and many similar companies will be hoping that Khan, after doing much to set the agenda for the Democrats’ assault on Big Tech, can deliver the goods.

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