U.S. Federal Trade Commission (FTC) Chair Lina Khan isn’t mincing words in her crusade against big tech companies, training her ire on their even bigger AI goals using a mob metaphor this week. Speaking at TechCrunch’s StrictlyVC conference in Washington, D.C on Tuesday, Khan said the number of cases the FTC brings isn’t as important as the type.
“One thing that’s been important for me is to make sure that we’re actually looking at where we see the biggest harm,” she explained. “Where do we see players that are systematically driving these illegal behaviors? Being able to go after the ‘mob boss’ is going to be more effective than going after the henchman at the bottom.”
Khan has made waves since being appointed chair of the FTC by President Joe Biden in 2021, recently banning non-compete agreements for most employees and attempting to block multiple blockbuster mergers and acquisitions.
Earlier this year, she put the brakes on what would have been the biggest fashion deal in history: Coach’s $8.5 billion acquisition of Michael Kors. Coach’s parent brand Tapestry was in talks to purchase Capri Holdings, which owns brands like Michael Kors, Versace and Jimmy Choo, before the FTC sued, arguing the acquisition would crush "direct head-to-head competition.” But big tech has always been Khan’s main focus when it comes to antitrust actions.
Last year, the FTC sued Amazon in a landmark lawsuit accusing the retail giant of using illegal methods to maintain its dominance. Also that year, the FTC hoped to ax Microsoft’s roughly $70 billion purchase of the gaming giant Activision Blizzard, but was rejected by U.S. District Judge Jacqueline Scott Corley, who said the FTC didn’t prove the deal would hurt competition.
More recently, Khan and the FTC have turned toward AI, launching multiple lawsuits against big tech companies, headlined by their recent investigation into Microsoft’s $10 billion investment and ongoing relationship with OpenAI, the $80 billion startup behind ChatGPT. Khan said in January she fears the big tech giant may be able to “exert undue influence or gain privileged access in ways that could undermine fair competition” in the AI arms race.
Kahn’s focus on antitrust cases has riled her critics and some investors, with Yale professor Jeffery Sonnenfeld labeling her a “competition cop” and CNBC’s Jim Cramer claiming she would be a “one-woman wrecking crew for your portfolio,” but she isn’t backing down.
Khan argued at TechCrunch’s StrictlyVC conference this week that coddling companies that are considered “national champions” is the wrong path.
“We’ve seen that some of the most significant breakthrough innovations have, historically, come from the startups, and the entrepreneurs, and the small guys who are able to just see things differently—see an opening in the market place and really disrupt in ways that disintermediates the big guys or really provides important competitive checks on them,” she said.
The FTC chair referenced key points in history where antitrust legislation has, in her view, boosted competition and led to innovation, including the Eisenhower administration's 1956 antitrust suit against AT&T’s Bell Labs. Bell Labs was forced to license all its existing telecommunications patents royalty-free after developing a monopoly on the market, a move that increased innovation markedly in the following years, according to multiple studies.
“We need to keep those lessons of history in mind as we again choose a path,” Khan said. “We just need to be very wary of these national champion arguments and really, have faith in open, fair, competitive markets as being what's going to be the driver of innovation.”
