Six years after writing an article arguing that Amazon violates competition, Lina Khan has sued the group as president of the Federal Trade Commission. This will be the confrontation of the century.
Lina Khan could have chosen immigration law, environmental law, criminal justice reform… these were the most in-demand majors in 2015, when she entered Yale Law School. But he opted for anti-monopoly law, an old law from the first third of the 20th century, from the New Deal years, when the administration actively intervened against monopolies and distrusted large mergers. A discipline that had been overshadowed at the end of the 70s while a radical vision of laissez faire was opening up that was well suited to the growth of groups like Apple or Microsoft.
We do not know why Lina Khan, representative of this meritocracy of Asian origin that triumphs in the Anglo-Saxon world, chose the specialty. Probably because behind his cold and calm gaze hides someone who cares about social justice. The daughter of Pakistanis (she a Thomson Reuters worker, he a consultant), she was born in North London in 1989. At the age of eleven, her parents moved to a small town with a white population in the state of New York. They went there to improve, but in the days that followed the attacks on the Twin Towers of 9/11, they had to endure racism and xenophobia. “They were treated as potential terrorists.”
Khan soon attracted attention. She studied politics, did a thesis on Hannah Arendt, became editor of the college newspaper, and considered working at The Wall Street Journal (a media outlet that has since fought her fiercely). The key moment in his life took place in mid-career, at Yale. In 2017, he published a 95-page article, “The Amazon Antitrust Paradox,” accusing the group of illegal practices to grow and eliminate competition.
The article carried an implicit message: the anti-monopoly law is outdated. In the 1980s, regulators had adopted a policy that rested on the idea that monopoly was synonymous with efficiency and that “consumer welfare” in the form of low prices was the priority. Khan reasoned that this argument looks too short-term and prevents us from calibrating the structural power of Silicon Valley groups and the potential effects of their activity on society.
The article focused on Amazon, a company that in order to grow had first subsidized prices, then placed companies and intermediaries in terrible conditions and had become the central avenue of the internet.
No company has disrupted the markets in which it operates as much as Amazon. Founded in 1994 as an online bookstore by Jeff Bezos and later converted into a seller of everything from infrastructure to the internet (the cloud) and entertainment. Along the way there have been hundreds of thousands of companies that have not been able to withstand the price competition. Some have disappeared. Others have adapted to the group’s rules and significantly reduced their margins.
There is a before and after Amazon in the world of distribution. But also in the labor market: its work rules in warehouses and in the distribution of deliveries have been harshly criticized. And, of course, in consumption. For the new generations, it is impossible to imagine a world without the click that allows the product you just bought to arrive at home in just a few hours.
Khan’s article made Amazon’s lawyers uncomfortable. They accused her of not understanding the sector. The restlessness went further when Joe Biden named her president of the Federal Trade Commission (FTC for its acronym in English). They filed a motion to disqualify Khan from participating in any lawsuits involving the company. Biden appointed her because he wanted to reform an institution he saw as too complacent to business.
Khan doesn’t like economists. They think he has an old-fashioned view of business and doesn’t understand the digital economy. That cutting these groups is unrealistic and that size, today, does not matter. But for academics, politicians and journalists, she is a liberal heroine, the great hope for regulating these monopolies and returning to economic democracy. Ultimately, their proposals do not differ so much from those of European regulators.
Washington lived an idyll with Silicon Valley. They were innovative, disruptive, bringing new services to everyone at a low price. But the age of innocence was shattered in the summer of 2019. Big tech stifled innovation: when a small competitor appeared, they dragged it down and disabled it. Social networks were no longer so funny. That year, an investigation was launched against Facebook, and another against Google for dominance in the internet search market. Complaints of companies suffocated by Amazon’s competition abounded.
Lina Khan is a tenacious woman. In six years, she has gone from something similar to an anti-monopoly activist to the president of the FTC, a body that last September 26 presented, together with 17 states of the Union, a lawsuit against Amazon. They accuse him of controlling online sales, stifling competitors, raising prices for users and costs for sellers.
For some analysts, the lawsuit is ill-conceived and will fly against the main argument of Amazon and its lawyers: consumers are happy with this company as it is now. But there is no doubt that there are many people who want him to win. The world needs a lot more Lina Khan.
