Tech

Tech’s antitrust regulatory fight with FTC chief Lina Khan will be messy

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For several years, Congress and regulatory agencies have warned that they could, in the future, try to break Big Tech. In the last week, this threat has become more real.

On June 11, Congress introduced a sweeping set of five antitrust bills with remarkable levels of bipartisan support aimed at technology giants – Amazon, Apple, Facebook and Google – and that could shatter their core activities. On June 15, in a surprise move, the White House named Big Tech an enemy Lina Khan will not only be a commissioner of the Federal Trade Commission (FTC), but the presidency of the powerful federal agency enforcing antitrust laws.

“If I were to run a large technology company, my pulse would run much faster today than it did 24 hours ago,” Bill Kovacic, who led the FTC under the presidency of George W. Bush, told Recode the day after the news that Khan will chair the FTC.

So now, even if the details aren’t yet clear on exactly what Khan or the antitrust projects might accomplish, supporters of Big Tech companies are stepping up their defenses. And one of the main antitrust criticisms that tech industry groups and lobbyists are putting up against is the idea that Big Tech is too big and needs to be strengthened.

These pro-tech groups argue that the current proposed legislation is a gross nuisance that could harm the U.S. economy and make it more difficult for everyday Americans to use popular technology they are accustomed to using. for free, such as email and social media. These proponents of the technology industry seek to convince lawmakers that Big Tech regulation will have unintended consequences that will hurt consumers. And they take in particular the goal of Khan, who has publicly defended the breakup of technology companies like Amazon.

“These proposals are the ones that will not support public scrutiny,” said Adam Kovacevich, who is CEO of the left-wing technology defense group Chamber of Progress – which is backed by Amazon, Facebook, Google and other technology companies. . “At the end of the day, what people want from Congress is to solve problems that are broken, not to break things that they already feel are working.”

Because industry leaders are afraid of Lina Khan

Khan’s appointment to the FTC – which went 62-28 with bipartisan support – is seen as one of the most serious regulatory threats for technology companies.

That’s why the FTC has broad powers to prevent large technology companies from buying their competitors, and even smaller ones that might one day become larger competitors. This means that the FTC in the future could prevent Facebook from, for example, buying the next Instagram. And the FTC could go even further, forcing tech companies to retroactively separate purchases and existing business lines, as it prevents Amazon from selling Echo and Kindle devices on its website (though such an effort would be difficult to achieve).

And Khan made a name for herself in 2016 when she published one academic paper who filed a legal case for breaking Amazon. Since then, she has been named head of the “Hipster antitrust” movement among young scholars who want to expand existing antitrust law to better address issues such as business concentration and income inequality. Khan has also gained the support of politicians across the ideological spectrum, including progressive Senator Elizabeth Warren and Republican Senator Josh Hawley.

The argument in favor of separating some of Big Tech’s business lines is that some large technology companies allegedly harm the choice of consumers and competitors by managing their own markets and giving preference to their own products over those of competitors. . An example that came up during antitrust investigations is a report that showed Amazon employees used data on third-party vendors on the Amazon marketplace to launch competing Amazon branded products.

Under Khan, the FTC could begin to aggressively prosecute cases on such issues. And so some proponents of the technology industry take aim at Khan’s past academic writing, which has been critical for Amazon and the economic power of other large technology companies.

“Lina Khan becoming president creates an air of bias and bias in decisions made when it comes to technology companies,” said Carl Szabo, vice president and general counsel of NetChoice, an industry group whose funders include Google. Facebook and Amazon, Recode.

Szabo said he believes that because of his academic work, Khan should refuse all cases involving technology. He noted that in 1966, a pharmaceutical company called American Cyanamide has successfully cited the FTC, forcing the then chairman of the committee to refuse a case because of his perceived prejudice against the company. Khan ha discarded the idea first that she should issue a blanket refusal from all technology cases, and said she would consult with the FTC’s ethics council in case of questions. on recusal on a particular case. The FTC declined to comment on criticism of Khan’s past work.

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At this point, there is no indication that a large technology company will consider pursuing a legal case based on Khan’s perceived prejudice, but the fact that the leaders of the technology industry group float the idea shows how they are alarmed by their powerful new role.

Regulatory technology is complicated even by experts

The challenges that Big Tech will face extend beyond Khan and the FTC. Congress has introduced five pieces of far-reaching legislation that could hurt these technology giants. Proponents of the Pro-Big Tech industry are in defense, calling on lawmakers to explain why they should not support this wave of bills.

“There is an effort to educate legislators on the unintended and harmful consequences of the bills we see in the House,” Szabo said.

Chamber of Progress sent a letter to Rep. David Cicilline (D-RI), who directs Big Tech’s antitrust legislative efforts as chairman of the powerful House Antitrust Subcommittee. In the letter, the group presented worst-case scenarios for consumers if the legislation passes, including a future where Alexa users may not be able to order from Amazon, YouTube may have to let users upload porn , and Apple iPhones can be sold without preinstalled apps.

Bloomberg seemed to confirm at least one of these scenarios when he reported Wednesday that Cicilline said its bill would prevent Apple from installing its own apps on iPhones would put it at a disadvantage to competing app creators. Technical analysts, lobbyists, and commentators right away criticized this, mocking the idea of ​​consumers buying an iPhone that is essentially a whiteboard, with no apps like the Apple App Store needed for the basic smartphone functionality.

“It’s one thing to say you’re against discrimination. It’s another thing to say you’re against iMessage and FaceTime pre-installed on an iPhone, ”Kovacevich told the Progress Chamber.

Cicilline’s The spokesman later wrote on Twitter that the congressman was misled and that the bill would not block Apple from preinstalled applications, but would instead force the company to let people uninstall or change Apple’s default applications. Currently, on the latest iPhones, you can cancel some – but not all – of Apple’s installed applications. You can already change the default applications for your own email is web browser on newer iPhones, though not on older ones.

Going back and forth on the details of the Cicilline project shows just how messy the battle is becoming between Big Tech supporters and politicians seeking to regulate the industry – particularly when it comes to nuanced discussions about consequences. unforeseen events that could result when regulating popular consumer technology such as iPhones.

It is undeniable that existing antitrust laws were not conceived for the era of the Internet. But there is also a open debate among members of Congress about whether regulation could stifle innovation. It doesn’t help that some DC politicians have been notoriously slow to understand the basics of how large technology companies work, as demonstrated in public hearings in recent years. And even for experts, the ramifications of changing widely used consumer technologies can be difficult to predict.

On the other hand, politicians like Cicilline who lead the prosecution to regulate technology argue that inaction could stifle innovation in a different way – preventing the rise of upheavals that could challenge the status quo of the most powerful. major technology companies.

It’s an ideological debate that is being fought tactically, with every party making its appeal to lawmakers, particularly Republican lawmakers that Democrats will probably need to pass these bills.

Kovacevich, of the House of Progress, said his group will launch an advertising campaign aimed specifically at members of Congress, to try to convince them not to support technological antitrust projects. It’s just another step in what will be a protracted struggle.

“The demand for it.” [Big Tech] Lobbying teams are – can you stop this? Or are your opponents eluding you? “This is a contest of ideas,” said former FTC chief Kovacic.




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