After months of deadlock, Lina Khan is unleashed

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WASHINGTON – When Lina Khan took over the helm of the Federal Trade Commission last year, it was with sky-high expectations that her tenure would quickly usher in a transformative era of accountability for Silicon Valley. Despite a slew of early setbacks, she says she’s bullish about the path ahead.

“It’s fair to say that the best is yet to come,” Khan said in her first interview with The Washington Post since taking office. “We have an incredibly active agenda and a whole set of really major initiatives that I think will come to fruition over this next year.”

Khan’s ambitions have been blunted by a months-long partisan stalemate at the agency preventing her from moving forward with some of her most significant plans to crack down on data privacy abuses and anticompetitive behavior. Despite Khan’s repeated calls for more resources, bills that would supercharge the 107-year-old agency to counter the tech giants’ deep pockets have largely stalled.

Internal dissension over Khan’s efforts to shake up the status quo has spilled into public view, with an annual government survey showing sinking morale within the agency and Republican Commissioner Christine Wilson criticizing Khan at major conferences.

Alvaro Bedoya’s May confirmation restored Khan’s Democratic majority, and she emphasized that she plans to address the rapid expansion of tech giants into new lines of business, such as virtual reality. Yet the clock is already ticking for Khan, especially as President Joe Biden’s approval ratings sink and Republicans appear poised to regain power in Congress – and more oversight of the FTC – in the midterm elections.

She said she wants the agency “to use all of the tools in our toolbox,” especially those that she says have been underutilized in the past – like crafting regulations to combat anticompetitive behavior and deceptive practices. Yet such efforts will face procedural hurdles that could consume months or even years.

“There’s a lot of interest in getting it started quickly,” she said. “That said, you don’t want to rush the process at the expense of the substance and having everything all buttoned up. So we’re striking a balance there.”

Before joining the agency, Khan was an academic known for her unconventional proposals to counter the influence of Amazon. Biden’s decision to name her chair of the agency was widely viewed as a signal that his administration would take a more aggressive line against Facebook, Google, Amazon and Apple. (Amazon founder Jeff Bezos owns The Washington Post.)

Yet as inflation and the pandemic have roiled the economy, she has been given a particularly broad mandate as agency chair. When gas prices began to surge last year, Biden called on the FTC to look into whether any “anti-consumer” behavior in the petroleum industry was contributing to the rising costs. Amid a nationwide shortage of baby formula, the FTC has opened an inquiry.

Khan said the agency’s ability to respond to these challenges across the economy has been hampered by a lack of resources.

“We get letters every week from members of Congress spotlighting particular issues we should be attentive to, from the baby formula shortage recently to all sorts of data privacy violations,” she said. “We have the incredible honor of being on the front lines of all these issues Americans are facing, but to be able to deliver on that mandate, we need resources.”

Khan’s history of criticizing corporate power and her lack of management experience have made her a lightning rod for industry lobbyists and colleagues alike. Khan has pursued a “politicized agenda” that has alienated fellow commissioners and career staff, said Sean Heather, the senior vice president of antitrust policy at the U.S. Chamber of Commerce, the nation’s largest business lobby.

“All eyes, including the Chamber’s, will be on what happens next as Khan seems hellbent on remaking the economy to her own liking,” Heather said.

Wilson, the Republican commissioner, has knocked Khan’s leadership openly at industry conferences, accusing her of disregarding career staff and underestimating in past criticism of GOP leadership how difficult it is to govern the agency. A November government survey found that morale was sinking among employees, with overall satisfaction with the agency dropping to 60% from 89%. (The Information previously reported these figures.)

Khan said she doesn’t take the criticism personally and is focused on implementing the Biden administration’s mandate to rethink how competition is being addressed across government.

“It’s no secret that this is a moment of change,” Khan said. “Moments of change can be difficult for people. And we fully recognize that, and we’re doing what we can to smooth the path to this different course.”

The agency deals with matters of bipartisan concern and works “closely” with members from both parties, said FTC spokesman Peter Kaplan. The agency recently voted on a bipartisan basis to open a probe into pharmacy benefit managers, which also drew support from Republicans in Congress. Kaplan also said Khan is “committed to making sure that the FTC continues to be a great place to work.” He also responded to the U.S. Chamber of Commerce, saying the agency would continue to stand up for a fair marketplace.

“We are not going to back down because corporate lobbyists are making threats,” he said.

Khan said the agency has made an “enormous amount of progress” in the first year, citing the challenges that it brought against Nvidia’s acquisition of the chip design company Arm and Lockheed Martin’s planned acquisition of Aerojet Rocketdyne. Following the FTC lawsuits, the companies scrapped the deals. She also cited recent data privacy wins, such as the commission’s recent unanimous decision to warn education technology companies against using the data they collect about children for advertising.

Yet while the agency was deadlocked, Khan’s hands were tied on some key tech deals. In March, Amazon closed its acquisition of entertainment company MGM without an FTC challenge, despite widespread criticism of the deal from Khan’s supporters. Khan declined to comment on whether the agency planned to revisit the deal now that it had a Democratic majority in place, noting that such decisions were also a question of resources.

She wants the FTC to learn the lessons from the past, through deals that may have made it difficult for small companies to thrive. In one of her most high-profile moves to date, she refiled an antitrust lawsuit against Facebook, challenging the company’s previous acquisitions of WhatsApp and Instagram. Khan said the deals happened as people were moving from desktop computers to phones. Because Facebook couldn’t keep up, the company resorted to “anti-competitive practices,” such as buying up its rising rival Instagram, she added.

Khan is closely watching how tech companies are adapting to new technologies such as voice, the cloud and virtual reality.

“We all know that dominant incumbent platforms are most threatened at these moments of transition,” she said, “but these moments of transition are also the ones that create the greatest chance of competition and create the greatest chance for entrepreneurs and start-ups to really enter and inject more competition into the market.”