On June 15, 2021, Lina Khan was appointed chair of the Federal Trade Commission (FTC). Upon assuming office, Khan identified her priorities in a memo to her staff: “American consumers, workers, and honest businesses depend on the Commission to champion a fair and thriving economy for all, and I am confident that we can deliver.” A top priority was taking on a massive wave of proposed mergers and other forms of “rampant consolidation.”
Khan’s appointment was the first of President Joe Biden’s, signaling the shift from a Republican to a Democratic administration. At the time she took her position, the commission was split two to two, along party lines. Just twelve days after Khan assumed her position, U.S. District Judge James E. Boasberg dismissed an antitrust case brought by the Trump Administration in 2020 against Facebook, alleging that it held a monopoly position in social media and seeking to force it to sell Instagram and WhatsApp.
At the time, Harvard’s Jason Furman feared that the federal courts would not be supportive of Khan’s effort to take on Big Tech. “There is relatively little that Lina Khan can do,” he told The New Yorker. “I think she’s going to face very big challenges, because the courts decide.”
However, Matt Stoller with the American Economics Liberties Project—a friend and former colleague of Khan’s at the Open Markets Institute—had a more optimistic assessment as to her prospects. He told Politico that agency chairs of the pre-2000’s era “defanged the commission, put economists in charge and made it an agent of monopolists.” He added, “The Big Tech giants are all creations of those shifts. What Lina is doing is going back to the pre-1980s model.”
In an interview with The Progressive, Stoller stuck with his earlier assessment. “I haven’t changed my position: she’s going back to that earlier model,” he says. When pushed as to whether the FTC has a chance to break up or at least contain Big Tech monopolies, he insists, “I think we are going to win.”
Under President Donald Trump, the FTC launched an inquiry into the terms of what are known as “exempted transactions”—i.e., acquisitions—that it believed may “lessen competition, or to tend to create a monopoly.” The inquiry focused on Alphabet (the parent company of Google), Amazon, Apple, Facebook, and Microsoft between January 1, 2010, and December 31, 2019.
“With the current House make-up, it could be quite interesting—with a progressive/conservative
alignment questioning the power of Big Tech.”
When it was completed in September 2021, Khan reflected on the study: “It captures the extent to which these firms have devoted tremendous resources to acquiring start-ups, patent portfolios, and entire teams of technologists—and how they were able to do so largely outside of our purview.” As of December 2022, Khan and an aggressive FTC have launched twelve antitrust suits. She has been aided by changes in the makeup of the commission—Democrat Alvaro Bedoya was confirmed in May, and Republican Noah Phillips resigned in October.
“The current lay-of-the-land is that there's now a full slate of Democratic FTC commissioners,” Sascha Meinrath, Palmer Chair in telecommunications at Pennsylvania State University, tells The Progressive via email. “So 2023 is the year for FTC action within this domain.” Going further, he adds: “With the current House make-up, it could be quite interesting—with a progressive/conservative alignment questioning the power of Big Tech.”
This shift has led to a flurry of to suits against Big Tech companies. One was filed against Twitter in May 2022 for violating an earlier FTC order by deceptively using account security data to sell targeted ads. The company agreed to pay a $150 million fine.
On August 19, 2021, the agency refiled a revised complaint that had been denied by a Washington, D.C., court seeking to break up Meta (formerly known as Facebook). The renewed complaint sought to block the company from acquiring the virtual reality (VR) company, Within, that produced the VR workout app “Supernatural.” The FTC alleged that the acquisition would stifle competition. Going further, it argued that instead of building a VR app on its own, thus potentially increasing market competition, Meta would limit “future innovation and competitive rivalry.”
The agency warned that Meta’s monopolistic intentions were evident in its acquisition of Instagram in 2012 and WhatsApp in 2014. It buttressed the complaint by pointing out that the company had already acquired several other VR apps, including fitness app “Beat Saber,” as well as Oculus VR, a VR headset manufacturer. “Meta could have chosen to use all its vast resources and capabilities to build its own VR-dedicated fitness app,” FTC lawyer Abby Dennis told The Washington Post. Instead, she added, it acquired the market-leading “Supernatural” app.
On August 5, 2022, the Washington, D.C., federal district court issued a temporary restraining order, and Meta and Within agreed not to close the proposed acquisition. On January 17, following an earlier agreement delaying the trial two weeks, the FTC rejected Meta’s request to pause the trial challenging its proposed merger with VR company Within.
In a third high-profile case, the FTC took on Microsoft over its effort to acquire the video game developer, Activision Blizzard. The acquisition was first proposed in January 2022 and was valued at an estimated $69 billion; Activision’s most popular games include “Call of Duty,” “World of Warcraft,” “Candy Crush,” and “Guitar Hero.” The agency argues that the deal “would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” It feared that the deal would give a significant market advantage over Sony, Nintendo, and its other platform and console rivals.
In still another action, the FTC requested information related to Amazon’s planned $1.7 billion acquisition of iRobot. In September, the Commissioners wrote a joint letter that stated:
If consummated, the iRobot purchase would further weaken competition in the smart home device market and entrench Amazon’s powerful market position in the wider structure of the digital economy. Amazon seeks to unduly expand its market power by eliminating a competitor through acquisition, rather than through organic growth.
Three other cases seem to be in the works. Epic Games, owner of the popular video game “Fortnite,” has sued Apple over the high commission fees that the Apple Store charges, thus allegedly creating an anti-competitive environment. Initially, a district court judge ruled in favor of Apple’s; Epic has appealed the decision. In a second case, the U.S. Department of Justice (DOJ) sued Google in 2020, alleging that it maintained a monopoly over the markets for online search services and search advertising through anti-competitive practices. The case will go to trial in September 2023.
And third, in January 2023, the DOJ and Attorneys General from eight states filed an antitrust suit against Google for monopolizing digital advertising technologies.
“The FTC was founded in response to harms created by the Industrial Revolution's Robber Barons, who used their economic and political power to enrich themselves at the literal cost of Americans everywhere,” Meinrath points out. He adds: “One hundred years later, we are now dealing with the fallout from the Digital Revolution (and the harms caused by today's mega-billionaires). Today, a new generation of leaders—like FTC’s Khan—are looking at what worked historically, and they aim to ‘bust the trust’ of today's digital fiefdoms and begin forging a new social contract for the Internet era.”