From John Cassidy’s “Will Joe Biden and Lina Khan Cut the Tech Giants Down to Size?” ($) posted Monday:
The daughter of Pakistani immigrants to the United States, Khan first came to public attention in 2017, when, as a student at Yale Law School, she published a lengthy article in the Yale Law Journal which argued that Amazon shouldn’t be excluded from antitrust scrutiny simply because it had a history of cutting prices. To the many retail businesses that have been decimated by Jeff Bezos’s juggernaut, Khan was merely stating the obvious. But her article represented a challenge to the policy orthodoxy that has dominated the world of antitrust law for decades. Originating in the Chicago School of economics and promulgated by conservative jurists such as Robert Bork, this approach emphasizes “consumer welfare,” which judges have interpreted to mean that anticompetitive practices can be justified if they lead to lower prices. Because Amazon charges lower prices than many offline retailers, and because other tech giants, such as Google and Facebook, provide online services for free, they have been largely immune from antitrust enforcement, despite their market dominance. Even as many of the tech giants’ competitors accused them of bullying tactics, such as “predatory pricing”—charging low prices for a time to drive rivals out of business—the U.S regulatory authorities and courts largely discounted these claims. (European regulators have been far tougher on Silicon Valley.)
Rather than engaging in arcane arguments about prices in particular markets, as many antitrust lawsuits have done, Khan took a historical approach. In her article, she pointed out that the creators of America’s bedrock antitrust laws—the Sherman Act of 1890 and the Clayton Act of 1914—had broader goals than reducing prices. “Congress enacted antitrust laws to rein in the power of industrial trusts, the large business organizations that had emerged in the late nineteenth century,” Khan wrote. “Responding to a fear of concentrated power, antitrust sought to distribute it.” She went on to compare Amazon to the vast railroad combines that Cornelius Vanderbilt and other robber barons put together by squeezing out smaller rivals and giving preferential deals to favored customers. The article concluded, “In order to capture these anticompetitive concerns, we should replace the consumer welfare framework with an approach oriented around preserving a competitive process and market structure.”
My take: Cassidy captures the crux of Khan’s crusade. Who Biden appoints to fill the empty seat at the top of the DOJ’s Antitrust Division is critical. Attorney General Merrick Garland reportedly favors a former Facebook lawyer.