Apple et al. nemesis Lina Khan profiled in the New Yorker

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.

14 Comments

  1. Gary Morton said:
    Oh great another like Margarethe Vestiger that wants to rule based on what she thinks the law should be instead of what the law actually states. There is the world, and there is the world according to Margarethe, never the twain shall meet. Yesterday’s Supreme Court ruling on the NCAA athletes would seem to indicate that the Court will not condone such executive overreach.

    4
    June 22, 2021
  2. Robert Stack said:
    @PED: Minor quibble – it’s Merrick Garland, not Merritt. On another note, surely you are not saying that an NYT reporter (Cassidy) accurately summarized the views of Ms Khan?! 🙂

    3
    June 22, 2021
    • Robert Stack said:
      Responding to my own comment: Oops! PED said this was in the New Yorker, not the NYT! Me bad!

      3
      June 22, 2021
  3. Gregg Thurman said:
    Still I ask, where was the anti-trust division of the DOJ when it filed suit against Apple and 5 book publishers for an action that was perfectly legal, while leaving Amazon unscathed?

    That course of action would not have occurred under Khan’s way of thinking. She would have attacked Amazon. Not being able to undercut the competition as it did with books (for years it’s only profit came from AWS) it’s quite possible Amazon would not have succeeded the way it did.

    3
    June 22, 2021
    • S Lawton said:
      Poor Apple! So misunderstood when it was looking after the behemoth publishers by offering to save them from Amazon if, and only if, they dictated terms to Amazon at the same time while agreeing to Apple’s terms. Never mind that book se!let’s have been setting the price of books themselves for decades, and except for ebooks, continue to do so to this day. Or that Barnes and Noble truly did create predatory pricing, sharply discounting their books and putting booksellers and other chains out of business and then raising prices Of that it Apple truly believed Amazon was acting in such a manner, they could have brought their own antitrust suit what Amazon.

      1
      June 22, 2021
    • Gregg writes: “where was the anti-trust division of the DOJ when it filed suit against Apple and 5 book publishers for an action that was perfectly legal, while leaving Amazon unscathed?”

      Kahn wrote her thesis in response, arguing that in the Apple Books case the DOJ was wrong. Her thesis made sense to me then. Still does.

      0
      June 23, 2021
      • S Lawton said:
        Her argument lies largely along the lines of predatory pricing and the ability to drive competition out of business. First Amazon virtually created ebook business. And it’s pricing was designed as a loss leader, not predatory pricing. Amazon views its target audience differently than publishers and most booksellers. It’s target is voracious readers who buy not just a handful of books a year but dozens mostly backlist that is where their profit lies. Second she did not so much disagree with the verdict, as argue that the current way of interpretation is what is wrong.

        0
        June 23, 2021
  4. Fred Stein said:
    My hope/guess is that Khan will pick her battles wisely, i.e. battles she can win in courts and in public opinion. Apple would not be low hanging fruit.

    1
    June 22, 2021
  5. Michael Goldfeder said:
    The NCAA ruling yesterday by SCOTUS had some very good language about antitrust as it relates to anything legislative that might be moving forward involving Apple. Moreover, writing a “paper” in law school has the practical application in cutthroat litigation of at best a footnote in a legal document.

    Kudos to her for snagging a high level government position with very embryonic legal experience. The legal team at Apple won’t be trembling.

    1
    June 22, 2021
  6. Jerry Doyle said:
    There seems this implicit need among some to compare the current anti-trust busting efforts with the Teddy Roosevelt era of anti-trust busting. Not so! During the Teddy Roosevelt era relative to anti-trust busting efforts, those efforts were wildly received among the populous & made the good president exceedingly popular. Additionally, Standard Oil & the big railroads all were engaged in price-cutting practices, collusive business deals, public misinformation & more shenanigans. None of the above applies to Apple today, especially in Apple’s attempt to be more public transparent & protective of its users’ privacy & security of their personal information. No, this anti-trust busting endeavor is not similar to the Teddy Roosevelt’s era.

    Additionally, for President Joseph Biden to succeed at re-election he must triangulate the two political parties & retain the existing political support from WS, Captains of industry & big business that he garner from the Republicans in the last election, if he wants to win in 2024. As deserving as Ms. Lina Khan is to receive her appointment, it is most unlikely she will receive the full blessing from the Oval Office that she will need to reshape the anti-trust legislative landscape.

    1
    June 22, 2021
  7. Neil Shapiro said:
    The only few things that Congress has really accomplished in my lifetime (I am 73) as far as regulating until-then profitable sectors of technology are the death of the steel industry and then the death of American Consumer Electronics in Audio and Video and a very nice followup blow to destroy the American silicon design and manufacturing industry. This attack on Tech is simply a repeat performance of their past triumphs. As always it is is being led by people who have no business to regulate what they cannot possibly understand and which on a philosophical and ideological level they demonstrably despise. It’s almost unimaginable that they could force Apple and Amazon and other tech giants to leave the country but I could see that happening. Maybe the Apple flying saucer actually has hidden thrusters.

    0
    June 23, 2021
  8. Alan Trerise said:
    Lina Khan: “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.”

    Wrong!

    No one expresses this better than Larry Summers on Bloomberg’s Wall Street Week (at 38:15 into the show): https://www.youtube.com/watch?v=2NeVgjtIqP4

    You go Larry!

    0
    June 27, 2021

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