Fight Club! Is Lina Khan a Heroine or a Bully?

Why are food prices so high? Why are Google and Apple so powerful? Why do the big airlines always seem to move their ticket prices in tandem? 

Companies say it is nothing more than the workings of the market. But Lina Khan, the chair of the Federal Trade Commission, says that the real issue is that too many companies have gained too much power, stifling competition and harming consumers.

For the three years Khan has been in office, she has acted as the country’s trustbuster-in-chief, attempting to block mergers she says will further reduce competition. Recently, the FTC sued to stop the merger of two supermarket giants, Kroger and Albertsons, arguing that the combination would raise prices and cost thousands of workers their jobs. (The companies argue that the merger will allow them to better compete with Walmart and Costco.) 

Khan has also targeted Big Tech, bringing a major lawsuit against Amazon and attempting to block a handful of Big Tech mergers. This has infuriated much of Silicon Valley, who say she is handicapping some of America’s most important companies and reducing the country’s competitive edge against China at a time when American industry is bursting with innovation. Indeed, even LinkedIn co-founder Reid Hoffman, an ardent supporter of Kamala Harris, has called for Khan to be fired. 

Matt Stoller, who writes the popular antitrust newsletter Big, thinks Khan is a force for good. Judge Glock, from the Manhattan Institute, thinks that most of what she’s done has been counterproductive. We asked them to battle it out in the Free Press Fight Club. —The Editors

First up, Matt Stoller:

One of the under-the-radar fights within Democratic politics is about 35-year-old FTC chair Lina Khan, who has frustrated a host of financiers and Silicon Valley titans with her aggressive approach to competition policy. In a Trump administration, she’ll be gone in a nanosecond. But even the tech billionaires supporting Kamala Harris want to see her fired. 

In a way, you can’t blame them. For four decades, the U.S. government has taken a laissez-faire attitude toward mergers, leading to a tremendous consolidation in industries across the board. Just since 2000, 75 percent of U.S. industries have become more concentrated, largely as a result of mergers. A host of smaller businesses, from independent pharmacies to cattle ranchers to app developers, are now being strangled by the rise of these powerful monopolists. When a market becomes consolidated, companies can use a host of financial tactics to cheat consumers and thwart rivals from entering a market.

Khan is in the vanguard of a new breed of antitrust enforcers who are trying to reverse the consolidation trend while also helping consumers and freeing businesses to compete. 

What has her FTC been doing along those lines? A lot. Here are four easy-to-understand agenda items:

• Recently we’ve seen the rise of junk fees, things like “resort fees” by hotels and “convenience fees” by corporations like Ticketmaster. The FTC has proposed a rule banning the use of these undisclosed fees, which will let businesses compete on the merits, instead of having to deceive customers to remain competitive.

• Inhalers today in America can cost between $400–600, versus $7 overseas. That’s because pharmaceutical companies use bogus patents in a complex regulatory scheme to thwart competition. After the FTC intervened to block this form of cheating, AstraZeneca, Boehringer Ingelheim, and GlaxoSmithKline all cut inhaler costs to $35. And generic producers are now able to come into the market and compete.

• As the economy moves to more subscription-based businesses, there’s an incentive for firms to make it easy to sign up and hard to cancel. The FTC is putting forward a rule called “Click to Cancel,” requiring that firms make it as easy to quit a service as it is to join one. Once again, honest businesses will benefit; deceptive ones will not.

• For the first time in decades, the FTC is seeking to block mergers that are likely to harm competition. One important win took place in 2021, when it blocked Nvidia from buying Arm in the semiconductor space. As a result, both firms focused on their core businesses. Arm went public, and Nvidia became one of the most valuable corporations in the world. The FTC is currently suing to block the merger of Kroger and Albertsons, which would be the largest supermarket combination in history and would consolidate our already too-centralized food system.

All of these measures are designed to allow honest businesses to enter markets and compete for the favor of consumers, instead of favoring incumbent monopolists and cheaters.

But more than any other industry, Khan has gone after Big Tech and especially the dominance of coercive middlemen like Google and Apple. This is something readers of The Free Press should care about deeply, because nothing less than free speech is at stake. 

To choose just one example of many: A month ago Apple imposed a 30 percent fee on users of Patreon, a platform for content creators. Given that it must distribute its iPhone app through Apple’s store or else lose its ability to attract customers, Patreon had no choice but to cripple the business of thousands of creators who use its services. Apple can now also impose content rules on those creators if it chooses. 

Why should you care about this move? If history is any guide, Apple is going to do the same thing to The Free Press by compelling its underlying platform, Substack, to comply with its take rate. After all, Substack has an app, and Substack needs to distribute that app via Apple’s store. Apple will take the money you spend to support this platform, and they could even try to boss around Bari Weiss and her stable of reporters. 

And if it’s not Apple, it’ll be Google with its choke point over Gmail and Chrome. In fact, Google’s trade association NetChoice recently argued to the Supreme Court that it can censor Gmail content if it chooses, and documents are coming out showing that it is redirecting ad revenue from publishers to itself. These gatekeepers have a dangerous incentive to favor established organs of power, like The New York Times and the government, and censor heterodox outlets like The Free Press.

Why are we in this situation? For the same reason large pharmaceutical firms can gouge people who need inhalers. Decades ago, we stopped enforcing laws against gatekeepers who seek to control us.

At this point, the only force that can restrain Apple and Google are antitrust enforcers who seek to block their exploitation of choke points. And Google, Amazon, Meta, and Apple are all facing government antitrust suits that seek to do just that. It is likely those suits are creating enough concern among executives that they haven’t cracked down on sites like The Free Press. Google has already lost two antitrust cases, and Apple has been found liable for unfair conduct.

In other words, the censorship we abhor is downstream from America’s monopoly crisis, and the answer has to be, in part, antitrust. What Lina Khan is trying to do is break through these bottlenecks. 

Both conservatives and liberals should be suspicious of consolidated corporate power. If the next president abandons the robust enforcement of antitrust law, as exemplified by Lina Khan, then enjoy your Apple overlords and their clubby relationship with The New York Times.

Judge Glock’s turn:

Lina Khan has received more fawning press coverage than any FTC chair in history. The press often notes that, at 32, she was the youngest person ever appointed chair. According to The New York Times she is a “legal wunderkind.” The Washington Post says her “superpower” is fighting the forces that threaten our economy and our democracy. She portrays herself as a lonely crusader against the predations of business, and the press is all in. 

Khan’s actual work at the FTC has been quixotic and even faintly ridiculous. Despite her high-minded rhetoric, the FTC under her reign has spent an immense amount of time on minutiae and has wrapped normal commercial disputes in apocalyptic garb. The actual results of her efforts have been minuscule or counterproductive.

The single biggest merger case brought by Khan’s FTC was the effort to block Microsoft from acquiring video game maker Activision. The main point of the FTC’s complaint against the nearly $70 billion merger was that Microsoft could boost its own Xbox game console by “degrading Activision’s game quality or player experience on rival consoles.” The idea that one of the most important labors of a major government agency would be to make sure players of the Call of Duty video game franchise don’t suffer slower shooting speeds makes all the elevated verbiage about antitrust seem hollow. 

One of Khan’s other big antimerger efforts was her attempt to block Facebook-owner Meta’s acquisition of the virtual reality company Within Unlimited. The FTC claimed that the acquisition would allow Meta to corner the all-important “virtual reality dedicated fitness app market.” The beleaguered citizens Khan wants to protect have not said a word about pricey online fitness apps, let alone “virtual reality dedicated” ones, but the agency spent untold resources fighting an incipient monopoly in a market that barely exists. 

Khan lost the Activision case in court, and the Within Unlimited case, and many others. In the Within case, the judge noted that Meta didn’t have its own virtual reality fitness app, had no intention of making one, and “lacked certain capabilities” to make one even if it had wanted. Why did Khan bring such a questionable case? For the simple reason that she had earlier stated that Facebook should be banned from making any acquisitions. Her previous statements led the FTC’s ethics official to recommend that she recuse herself from the case, a recommendation she ignored.

Khan has won cases by pushing settlements outside of court, but here again the “harms” she is trying to alleviate are questionable. As part of her odd interest in protecting gamers, Khan’s largest single settlement was getting Epic Games to agree to pay $520 million because of, among other things, its “counterintuitive, inconsistent, and confusing button configuration” in the game Fortnite. The settlement will protect vulnerable Fortnite players from making unwanted cosmetics and costume purchases for their digital characters.

Khan’s FTC at times seems to have only the most tenuous understanding of the businesses it oversees. It has inaugurated a campaign against what Khan calls “commercial surveillance,” by which she means almost any use of information by companies. In proposed new rules, the FTC warns of the hidden dangers that lurk in such surveillance, including that “[s]ome employers, for example, reportedly collect an assortment of worker data to evaluate productivity.” The FTC also explained its “concerns” that companies use “marketing to influence or coerce consumers into choices they would otherwise not make, including purchases.” Khan is eager to end such nefarious practices as companies knowing what their workers are doing and using advertising to influence purchases.

Besides her lack of understanding of the basic practices of business, there are also “her managerial failings,” as even that laudatory Washington Post profile had to acknowledge. In a survey before Khan took charge, 87 percent of FTC employees thought that top agency officials demonstrated honesty and integrity. Afterward, that dropped to 49 percent. Employee morale has recovered somewhat, but that may be due to the rapid exodus of experienced but disgruntled staffers since she arrived.

The fundamental problem with Khan’s FTC is that it has abandoned the narrow attempt of having antitrust protect consumers and instead substituted more expansive and amorphous goals. Now the FTC is supposed to fight bigness in general, stop companies from gathering data the government doesn’t like, and even protect the government itself from the nefarious influence of business. How Khan thinks FTC officials and unelected judges are supposed to factor in these highfalutin goals with basic antitrust policy is a bit of a mystery. As one former FTC official asked, “What am I going to do? Go to court and say, ‘This cement merger threatens democracy’?”

Historically the FTC was one of the most respected agencies of government. Its scope was narrow and specific, and it enjoyed bipartisan backing. In just a few years Khan has changed it into a hobbyhorse of a still-incipient antitrust movement with undefined goals and a general distaste for businesses it doesn’t understand. A former official at the FTC noted the problems at the agency since her arrival and said, “It’s not going to get any better until she leaves.” That’s the best scenario.

Matt Stoller is the director of research at the American Economic Liberties Project. He writes the Substack Big. Judge Glock is the director of research and a senior fellow at the Manhattan Institute.

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