FTC Chairwoman Lina Khan was the youngest person appointed to her position when she took office in 2021. But once her term ends in September — and then she will remain until her successor is named — her age may be the last thing people remember. About her ruling.
It is likely that Khan’s legacy will attack Big Tech, and do so publicly. Unlike her predecessors, Khan routinely speaks with the media about how the FTC is carrying out its mandate of antitrust enforcement and consumer protection, putting today’s tech giants on constant notice.
This strategy is all the more apparent given the FTC’s small size, with only 1,300 employees working on about 150 cases at a time, and supported by an annual budget of only $400 million. This is just a drop in the ocean for some of the groups the agency is investigating.
We spoke with Khan about her approach — and what she thinks Silicon Valley misunderstands about it — in a sit-down earlier this week at one of TechCrunch’s more intimate StrictlyVC events, held in Washington, D.C. Excerpts from that conversation have been edited for Length below. You can listen to the entire conversation here.
Over the past two decades, Washington has come under the control of big players like Google and Microsoft. I wish we could start with the Wall Street Journal a report That federal regulators are moving forward with investigating some of these big players — Microsoft, OpenAI, Nvidia — if there’s anything you can say about your plans.
You’re right that there’s a lot of interest across DC and making sure that we’re able to harness the opportunities and potential that these tools provide while also making sure that these markets remain open, fair and competitive, rather than allowing certain types of bottlenecks or choke points to emerge in ways that might It undermines that competition, that opportunity, and that innovation. . . I was in Silicon Valley a few months ago, and it was really interesting to hear from these founders in particular about how there’s a lot of ambiguity right now about who has access to some of these key inputs, whether it’s computational or in models, whether There is no guarantee that you are not actively feeding proprietary information. And so I think there’s a lot of excitement, but we also hear some of the weariness that can set in when you realize that there’s too much concentrated power already, and so the concentration of that power can inhibit innovation and competition.
It also seems like some of the people it’s trying to regulate are getting more creative about the deals they make, like Microsoft’s deal with Inflection AI, an artificial intelligence company whose co-founder and employees Microsoft hired last March and is now being paid a $650 million licensing fee by Microsoft so it can… Of resale [InflectionAI’s] technology. it’s not Technically Fusion. Did they talk to your agency or other regulators about what they were doing?
I’m limited in what I can say about some of these specific deals or specific potential matters. I will say that we are interested in being vigilant to make sure that we do not see evasion of existing laws. We have already made clear that all existing laws remain in effect: laws prohibiting mergers that would significantly reduce competition, and laws prohibiting price-fixing and collusion. Whether you set prices through an algorithm or through a handshake, both are still illegal. So, across the board, we’re trying to scrutinize and make sure that we don’t see some of these innovations in potential violation of the law. We want to make sure everyone plays by the same rules.
I will say that earlier this year, we also launched an investigation into some of these strategic partnerships and investments to make sure that we understand what’s actually going on here. We have heard some concerns about, for example, whether some of these partnerships and investments could result in privileged access for some or exclusionary access for others. . This work is still ongoing as well.
Apple has also made a lot of announcements [this week at WWDC]. It said it is integrating OpenAI into some of its offerings; It said it is also open to working with other third parties, including Google Gemini. It seems like a lot of the partnerships are between the same players which might have you a little worried at the moment. What do you think came out of this event?
We’ve seen that some of the most important breakthrough innovations have historically come from startups, entrepreneurs, and small businesses who are able to see things differently, see openness in the market, and create real change in ways that disintermediate big corporations. youths . . .
It is true that what we can say now is that some incumbent firms may control access to the inputs and raw materials needed for some of these innovations. We therefore need to be vigilant to ensure that this moment of competition, innovation and change is not exploited by incumbents in ways that close down the market and prevent us from truly enjoying innovations and competition. Which kept our country at the forefront historically. . .
I know you don’t buy this argument that these companies should be protected [from antitrust action] Because if it is slowed down in any way, it weakens the United States as a country. On the one hand, many people agree with this; They want to see things broken down so startups can breathe. Others might say: “This technology is moving much faster than anything we’ve seen before.” Autonomous weapons could incorporate this technology. How do you raise the issue of dismantling matters without exposing the country to any danger?
Even 40 or 50 years ago, when the Department of Justice was investigating AT&T, it was the Department of Defense that stepped in and said, “Hey, we really need to tread carefully here because taking antitrust action against AT&T could pose a national security risk.” And so, even back then, we were hearing a lot of these similar arguments.
There are some natural experiments. At different moments, we have faced a choice about whether we should protect and pamper our monopolies or alternatively whether we should protect fair competition laws. Time and again we have chosen the path of competition. And that’s what ended up fueling and driving a lot of these breakthrough innovations and a lot of the remarkable growth that our country has enjoyed that has allowed us to stay ahead of the curve globally. If you look at some of the other countries that have instead chosen the national champions model, they are the ones that have fallen behind. I think we need to keep these lessons of history in mind as we choose our path again.
There are founders and VCs in this audience who have mixed feelings about you because they want their companies to thrive, and they’re concerned that you’ve been so vocal about focusing on big tech companies that companies don’t. [acquisitions]. Exits represent a major path for VCs and founders; How do you make them comfortable that you are doing what is best for them in the short and long term?
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Certainly, we understand that for some startups and founders, acquisition is a major exit route they are interested in. In fact, what the law prohibits is an exit or takeover that would strengthen the monopoly or allow a dominant company to take over. Emerging threat and competitive threat. . . Just to step back, in any given year, we see as many as 3,000 merger filings reported to us. About 2% of those get a second look by the government, so you have 98% of all deals that go through for the most part.
I will also say that if you’re a startup or a founder who’s keen on an acquisition as a director, I think a world where you have six or seven or eight potential suitors is a better world than a world where you only have one or two.
There are 1,500 people on the FTC?
About 1,300 people, which is actually 400 fewer people than in the 1980s, even though the economy has grown 15 times more than that. . We’re a small agency, but we definitely punch above our weight.
I don’t know whether you are taking more action than your predecessors, or whether you are more clear about it. Do you know if you are moving at a faster pace than your predecessors in this role?
You look at the numbers and there are some upsides there. But in my opinion, counting the number of lawsuits or the number of investigations is only one way to try to determine the impact. The types of cases you file are also important. One thing that was important to me was making sure that we actually look at: Where do we see the most damage? Where do we see players who we believe are more systematically causing some of these issues in illegal behavior? So, in the same way that being able to go after a mob leader will be more effective than going after some of his followers at the bottom, you want to be efficient in your enforcement strategy. That’s why we’ve been looking upstream and taking lawsuits that could actually go up against some of the big guys. We believe that if we succeed, [it will] Have a really beneficial impact on the market.
And when it comes to deterrence, I think we’re already seeing some of that. We routinely hear from top dealmakers, top antitrust lawyers, who will say frankly that five, six, seven years ago, when you were thinking about a potential deal, antitrust risk or even antitrust analysis was not near the top of the list. The conversation, now is front and center. For the outlet, if you’re getting companies to think about this legal issue on the front end, that’s really good because then we don’t have to spend a lot of public resources on deals that we think are in violation of the laws.
To scale your relatively small office, which has a fairly limited budget, are you using AI?
And we’re thinking: Are there ways, especially with some of our economic analysis, to leverage some of these tools? Obviously, being able to do that would require very significant computing upgrades, which is what we’re asking Congress for more funding to be able to do. [secure].