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Tech antitrust regulation battle with FTC Director Lina Khan will be tough

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For several years now, Congress and regulatory agencies have warned that they may, in the future, attempt to divide Big Tech. Last week, that threat became more real.

On June 11, Congress introduced a broad set of five antitrust bills with notable levels of bipartisan support that targeted the tech giants – Amazon, Apple, Facebook, and Google – that could potentially divide their core businesses. On June 15, in a surprise move, the White House appointed Big Tech nemesis, Lina Khan, not only as commissioner of the Federal Trade Commission (FTC), but as chair of the powerful federal agency that enforces antitrust laws.

“If I were running a big tech company, my pulse would be racing a lot faster today than 24 hours ago,” Bill Kovacic, who headed the FTC under George W. Bush, told Recode the day after the news broke. that Khan would chair the FTC.

So now, while the details are still unclear on what exactly Khan or the antitrust bills could accomplish, supporters of big tech companies are raising their defenses. And one of the main antitrust criticisms that tech industry groups and lobbyists are rejecting is the idea that big tech is too big and needs to be controlled.

These pro-tech groups argue that the current proposed legislation is a serious overreach that could harm the US economy and make it difficult for ordinary Americans to use popular technology they are used to getting for free, such as email and social media. . These tech industry supporters are trying to convince lawmakers that regulating big tech will have unintended consequences that will harm consumers. And they are particularly targeting Khan, who has publicly advocated for the division of tech companies like Amazon.

“These proposals are the ones that will not stand up to public scrutiny,” said Adam Kovacevich, executive director of the center-left technology advocacy group Chamber of Progress, which has the backing of Amazon, Facebook, Google and other tech companies. . “At the end of the day, what the people want from Congress is to fix the problems that have been broken, not to break the things that they already feel are working.”

Why Industry Leaders Are Afraid of Lina Khan

Khan’s appointment to the FTC, which went through 62-28 with bipartisan support, is considered one of the gravest regulatory threats to tech companies yet.

This is because the FTC has broad powers to prevent major tech companies from buying from their competitors, as well as smaller startups that could one day become big competitors. This means that the FTC in the future could prevent Facebook from, say, buying the next Instagram. And the FTC could go even further, by forcing tech companies to retroactively separate acquisitions and existing lines of business, such as preventing Amazon from selling Echo and Kindles devices on its website (although such an effort would be difficult to achieve). .

And Khan made a name for himself in 2016 when he posted academic article who filed a legal case to split Amazon. Since then, she has been dubbed the leader of the “Hipster Antitrust” Movement Among Young Academics who want to expand existing antitrust law to better address issues such as business concentration and income inequality. Khan has also won the support of politicians from 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 lines of business is that some of the major tech companies allegedly hurt the choices of consumers and competitors by running their own markets and giving preference to their own products over those of the company. competence. An example that has emerged during antitrust investigations is a report that showed Amazon employees used data on third-party sellers in the Amazon marketplace to launch competing products under the Amazon brand.

Under Khan, the FTC could begin aggressively pursuing cases on these kinds of issues. And so some supporters of the tech industry point to Khan’s previous academic writings, which have been critical of Amazon and the economic power of other big tech companies.

“The fact that Lina Khan is the president creates an air of prejudice and bias in the decisions that are made when it comes to technology businesses,” said Carl Szabo, vice president and general counsel of NetChoice, an industry group whose sponsors They include Google, Facebook, and Amazon. Recode.

Szabo said he believes that due to his academic work, Khan should refrain from any technology-related cases. He noted that in 1966, he called a pharmaceutical company American Cyanamid successfully sued the FTC, which forced the then chairman of the committee to recuse himself from a case due to his apparent prejudice against the company. Khan has previously discarded the idea that it should issue a blanket disqualification of all technical cases, and said it would check with the FTC’s ethics board if questions arise on the challenge in a particular case. The FTC declined to comment on criticism of Khan’s previous work.

At this point, there is no indication that any major tech company is considering filing a legal case based on Khan’s perceived bias, but the fact that leaders of tech industry groups are floating on the idea shows just how alarmed. They are for their new and powerful role.

Regulating technology is difficult even for experts

The challenges facing Big Tech extend beyond Khan and the FTC. Congress has introduced five far-reaching laws that could harm these tech giants. Pro-Big Tech industry advocates are on the defensive, asking lawmakers to explain why they shouldn’t support this wave of bills.

“There is an effort to educate legislators about the unintended and damaging consequences of the bills that we are seeing in the House,” Szabo said.

Chamber of Progress sent a letter to Representative David Cicilline (D-RI), who leads Big Tech’s antitrust legislative efforts as chair of the powerful House Antitrust Subcommittee. In the letter, the group laid out potential worst-case scenarios for consumers if the legislation passes, including a future where Alexa users might not be able to order on Amazon, YouTube might have to allow users to upload porn, and videos Apple iPhones could be sold. without any pre-installed app.

Bloomberg seemed to confirm at least one of these scenarios when he reported Wednesday that Cicilline said his bill would prevent Apple from installing its own apps on iPhones because doing so would hurt competing app makers. Technology analysts, lobbyists and commentators immediately criticized This, poking fun at the idea of ​​consumers buying an iPhone that is essentially a blank slate, with no apps like Apple’s App Store necessary for basic smartphone functionality.

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

Cicilline’s the spokesperson later wrote on Twitter that the congressman was misquoted and that the bill would not block Apple from pre-installed apps, but would force the company to allow people to uninstall or change Apple’s default apps. Currently, on newer iPhones, you can remove some, but not all, of Apple’s installed apps. You can now change the default apps for your email and web browser on newer iPhones, though not on older ones.

Going back and forth over the details of Cicilline’s bill only shows how messy the battle is getting between big-tech supporters and politicians trying to regulate the industry, particularly when it comes to nuanced discussions about unintended consequences that they could result when popular consumer technology like iPhones is regulated.

It is undeniable that the existing antitrust laws were not designed for the Internet age. But there is also an 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 grasp the basics of how major tech companies operate, as demonstrated in public hearings in recent years. And even for experts, the ramifications of adjusting widely used consumer technologies can be difficult to predict.

On the other hand, politicians like Cicilline who are leading the charge to regulate technology argue that inaction could stifle innovation in a different way, by preventing the emergence of upstart companies that could challenge the status quo of the most powerful major tech companies.

It is an ideological debate that is being fought tactically, with each side appealing to lawmakers, particularly Republican lawmakers that Democrats will likely need to get these bills passed.

Kovacevich of the House of Progress said his group will launch an ad campaign specifically targeting members of Congress to try to convince them not to support the tech antitrust bills. It is just one more step in what will be a prolonged fight.

“The question for him [Big Tech] lobbying teams is: can you stop this? Or have your opponents outwitted you? “said former FTC leader Kovacic.” This is an ideas contest. ”

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