Why are Facebook and Amazon afraid of Lina Khan? | Business and Economic News

Why are Facebook and Amazon afraid of Lina Khan? | Business and Economic News


Most Americans cannot name the chairman of the US Federal Trade Commission (FTC), the US antitrust regulator, because this position usually does not attract widespread attention. But Lina Khan is changing this situation.

The 32-year-old associate professor of law at Columbia University (currently on vacation because she is in the government) has armed large technology companies, and the Federal Trade Commission may be preparing to take more explicit antitrust actions than it has been in decades.

Since being appointed as FTC chairman by US President Joe Biden in mid-June, the two tech giants Amazon and Facebook have Submit a petition asking her to evade From the decisions about them.

Since taking charge of the organization, Khan will host her second public meeting on Wednesday.

Here is what you need to know about the brewing battles between Khan and some of the largest technology companies in the world.

Let me talk about the first thing first. What does the Federal Trade Commission do?

The Federal Trade Commission was established in 1914, mainly to “break the trust.”

Since then, it has protected consumers by creating “a vibrant economy characterized by fierce competition and consumers’ access to accurate information.”

It is led by five commissioners, and no more than three commissioners from the same political party. The FTC now has the Democratic majority.

So what kind of power does it have?

High Power. The FTC can investigate violations, enforce enforcement, and formulate rules and penalties.

The decision relies on voting, but as chairman, Khan sets the agenda for the agency.

Lina Khan believes that Amazon is a monopoly, comparable to the American railroads at the turn of the 20th century [File: Graeme Jennings/Washington Examiner/Bloomberg]

So who is she?

Khan published an article called Amazon’s Antitrust Paradox in the Yale University Law Journal in 2017 when she was a student and became famous. Her article urges to redefine the meaning of “monopoly” for the digital age.

Why do we need to redefine?

In the past, trust regulation focused on price. Monopolies may have the ability to raise prices, which would harm consumers’ interests.

But companies like Amazon use price cuts to get the best results in the competition, and Khan believes this behavior is also harmful. Lower prices provide it with a huge market share, which allows it to influence the economy and create an environment in which even competitors must rely on Amazon and its platform to succeed.

How did Khan redefine monopoly?

Khan believes that Amazon is a monopoly, comparable to the American railroads at the turn of the 20th century. Monopolies are bad because although low prices may satisfy consumers in the short term, they are bad for the economy and individual consumers in the long run because they stifle competition—which ultimately harms innovation—and innovation It is a factor to maintain economic competitiveness.

She wrote in the paper: “The long-term interests of consumers include product quality, diversity and innovation-these factors can be best promoted through a strong competitive process and an open market.”

Do you agree with her?

Do not. Critics believe that Amazon’s popularity and low prices should not make the company a target, and Amazon believes that its unique approach creates new opportunities and competitive avenues for emerging companies.

Republican Senator Olin Hatch referred to Khan’s paper and those who supported it as “fashionable antitrust.”

Why did US President Joe Biden let Khan lead the FTC?

Biden believes that Khan is the woman responsible for reshaping antitrust laws and getting large technology companies to respond to anticompetitive practices.

Progressive people like Senator Elizabeth Warren of Massachusetts agreed-she called Khan’s leadership of the FTC “a huge opportunity to do a great deal by restoring antitrust enforcement and cracking down on monopolies that threaten our economy, society, and democracy.” Structural changes in the country”.

On July 9, the Chairman of the Federal Trade Commission Lena Khan (middle left) stood behind President Joe Biden and signed an executive order aimed at promoting competition in the U.S. economy [File: Evan Vucci/AP Photo]

How does the big technology react?

Facebook filed a petition last week asking Khan to withdraw from an antitrust case involving it, on the grounds that her past writings and comments made her biased against the social media giant.

Amazon-which is facing multiple investigations by the Federal Trade Commission-filed a similar motion to try to get Khan to withdraw from the proceedings involving it.

Can Amazon and Facebook get what they want?

Potential. In the 1970 Cinderella Career and Intensive School and FTC case, the court ruled that the chairman’s refusal to withdraw was a denial of due process. In the case of the American Cyanamid Company against the FTC in 1966, the court disqualified the chairman from hearing because he had previously conducted investigations for the Senate Antitrust and Monopoly Subcommittee.

However, even if these companies’ recusal requests are not successful, experts said that Big Tech’s move may cast a shadow over the FTC’s participation and Khan’s leadership in future antitrust cases.

What is Khan’s opinion on Facebook and Amazon’s withdrawal application?

Khan said that under the ethics law, which focuses mainly on economic conflicts, she does not have to avoid herself. Khan promised to follow the facts of the case during the confirmation process and said that if there is a challenge, she will consult the FTC ethics supervisor.

What is Biden’s plan to promote competition more broadly?

Although Biden is not as progressive as other Democrats in the 2020 presidential race, Biden is campaigning on a platform that supports unions and promises to better protect consumers.

To this end, he recently signed an executive order containing 72 measures aimed at restricting corporate power and increasing corporate competition in a wide range of fields, including large-scale technology.

What about Republicans?

Even in the polarized political climate of the United States, how to best regulate American technology giants such as Amazon, Google, Apple, and Facebook has become the slogan of both parties, although the two sides often disagree on the best approach.

In a severely divided Congress, 48 ??Democratic senators and 21 Republicans supported Khan’s nomination to lead the FTC, which illustrates the problem. However, some Republicans questioned whether she has enough work experience.

Last month, both Democrat and Republican legislators announced five bills aimed at establishing a guardrail around mergers and creating a more level playing field for competitors to control the power of large technology companies.

With the bipartisan support of antitrust legislation and Khan’s bipartisan support, this issue is likely to become the core of the FTC’s work in the coming months.

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