As early as 2017, Lina Khan became famous in the industry with a paper entitled Amazon's antitrust paradox published in Yale Law Journal. Shortly after taking office, Lina Khan led the antitrust lawsuit against Facebook's acquisition of instgram and WhatsApp.
For Lina Khan's fierce offensive, Amazon and Facebook accused the chairwoman of being an "antitrust activist" on the one hand and applied to the court to "avoid" the trial of relevant cases on the other hand.
Lina Khan has successfully become the "most feared woman" of all American technology giants.
Not long ago, Lina Khan accepted CNBC's TV This is also her first appearance in an interview with commercial media. During the hour long dialogue, the hosts Andrew Sorkin and Kara Swisher "tortured" Lena Khan in all directions.
During the dialogue, Lina Khan's answer often begins with "look", which seems to be seriously explaining the truth to someone she doesn't know very well. Unlike her slightly immature performance, she clearly expressed how FTC, as a regulator, thought about how to implement the "antitrust" policy of the United States. In the face of the "criticism" of the giants, the young chairman was not intimidated.
Here are the highlights of Lina Khan's dialogue:
The "anti-monopoly law" is outdated and needs to be revised to adapt to the current dynamic environment, especially the digital market;
The period when potential platforms begin to appear is also the time when monopoly is most likely to occur, and law enforcers should pay most attention to it;
Over the past 20 years, Internet giants have wantonly acquired because they know there will be no serious consequences. Supervision needs a strong attack, reflecting the "deterrent" to giants;
Chinese Internet companies entering the US market will not become an excuse for Silicon Valley giants to "monopolize";
Deny that he is an antitrust "activist" and will not directly talk to the CEO of technology companies.
The following is a transcript of CNBC conversation with Lina Khan, sorted out by geek Park (ID: geekpark):
Platform change period = antitrust key point
Moderator: acquisitions and mergers in 2021 are close to $6 trillion. Just before the interview, [Microsoft]( ?site_id=242986&euid=&t=https://www.microsoftstore.com.cn/ ) It announced that it would buy Activision Blizzard for nearly $70 billion. The game industry is usually not considered to be related to monopoly. What do you think of a large company's acquisition in an industry that is not regarded as monopoly
*Lena Khan *: This is a very important issue. FTC and DOJ have been studying this issue, but it is not uncommon. Over the past two decades, the top five technology giants have made hundreds of mergers and acquisitions, many of which have not attracted attention.
Previously, FTC has conducted research on these acquisitions to try to understand what is missing and what we can learn to ensure that we can accurately identify and better distinguish which types of transactions may be illegal, even if these acquisitions are not on the path of our previous research.
This is the process of revising the "merger guidelines" together with DOJ, which is completely based on the law in Congress in 1914, which points out that mergers and acquisitions that may greatly reduce competition and tend to create monopolies are illegal. In practice, it means that the standards will change according to economic and market conditions.
With the growth of new technologies, the market dynamics have changed, so we need to ensure that the tools and frameworks we use and the problems we raise are consistent with the current market environment and reality, which is what we are doing.
Moderator: on the acquisition of Activision Blizzard by Microsoft, Bobby Kotick, CEO of the latter company, mentioned competition and metauniverse, and insiders also mentioned China many times. Will you consider the international environment when revising the M & A guidelines, because these technology giants can expand overseas
*Lina Khan *: This is a big problem, but it is not a new problem. The landmark antitrust case of the Ministry of justice against Microsoft was similar to the current market situation at that time. Microsoft has controlled the operating system. The reason why it can maintain this dominant position is because it has mastered the "application barrier". If any company wants to enter the system track, it must have basic applications to attract consumers, which leads to the problem of chicken and egg.
Java and Netscape can provide users with an alternative platform for customers to own applications, threatening Microsoft's monopoly. Therefore, the Justice Department's case claims that Microsoft took action (in windows Adding free IE browser to the system is really to maintain its monopoly position. Kill these competitors in some way in the operating system.
We need to raise the same question today, especially when we see the emergence of new technologies for potential alternative platforms, this potential transition time is also a time for law enforcers to be particularly vigilant , because it is a time when giants panic and realize that they need to maintain relevance to maintain their leading position. They may have to adopt strategies that may eventually lead to violations of the law.
Facebook's acquisition of instgram and WhatsApp makes a smooth transition to the mobile era ｜ network
Moderator: at that time, some people were not optimistic about Facebook's acquisition of instgram and thought it would fail, but now it seems that this acquisition is obviously too successful. When should regulators judge which mergers are feasible and which are not
*Lina Khan *: for regulation, the fundamental question is whether mergers and acquisitions reduce competition.
Host: don't all mergers and acquisitions reduce competition
*Lina Khan *: they will reduce competition to a considerable extent and tend to create monopoly. Congress needs law enforcers to act not just when the third and fourth companies merge or when the first and second companies merge, but actually at an early stage. When you see the trend of industry concentration, it may also be the time for law enforcers to take action.
FTC is currently suing Facebook. On the one hand, it accuses instagram and WhatsApp of illegal acquisitions, which are also to maintain its monopoly position.
On the other hand, because the background of the acquisition is PC to mobile phone During the transition, Facebook saw it, but it is not competent to transform to mobile devices. It does need to make these acquisitions to get through this transformation**
In hindsight, FTC reviewed the documents and existing evidence. Now we can determine that this is an illegal transaction, but I think it is part of the process of revising the M & A Guide to conduct these studies to understand what goals we missed and help us answer this question correctly.
Moderator: important mergers and acquisitions are on the one hand. Now technology giants will also copy the product ideas of other companies. What about supervision at this level
*Lina Khan *: the purpose of revising the M & A guidelines is to distinguish the "blind spots" of the past law and raise questions that have not been raised in the past. Some of them are in the field of technology, while others are related to buyer monopoly or employment impact. Of course, it includes more than technology, but the whole industry.
With regard to the digital market, there are some fundamental problems, such as the acquisition of technology company, which are purely for the purpose of building a moat; Another problem is data. When a company acquires another company, the latter's business sensitive data can give the former an advantage and help them through an important transition period ; In addition, we will also study the externalities of the network to see how these companies use the uniqueness of the digital market to gain competitive advantage.
In 2021, the world's most valuable enterprise, Internet companies continued to dominate the list ｜ teslati
China's rival cannot become an "excuse" for American giants
Moderator: Based on the market value in 2022, Apple , Microsoft, Saudi Aramco, alphabet (the parent group of Google), Amazon and other technology giants occupy the top 10 in the market value of global companies. Back ten years ago, these companies still exist
Earlier, the names on the list would rotate almost completely. So the question is, when the market is such a situation, should regulators themselves intervene and when? I think there is a time problem with all this
*Lena Khan *: Yes, so the key task of antitrust enforcers is to ensure that all companies can compete in a market based on their strength.
An entrepreneur and entrepreneur can be successful if they come up with products and ideas that consumers like. Whether people can compete fairly, so the purpose of law enforcers is to create an open and fair competitive market.
The job of law enforcers is not to choose winners or losers, but to ensure that companies compete fairly
FTC finally took significant enforcement action against Facebook afterwards, because we must ensure that companies in the market know that similar transactions will not be exempt from investigation.
Moderator: Zuckerberg often says tiktok. He will defend Chinese technology giants such as Tencent and Alibaba, saying that market competition will eventually get everything back on track. Microsoft also faced antitrust at that time, and now it is one of the most valuable companies in the world. What do you think
*Lina Khan *: Microsoft has indeed faced major antitrust lawsuits before. I wonder if there will be the vigorous development of Internet companies if the Ministry of justice did not take action in that year.
From this point of view, law enforcers are very important for the healthy development of the market. They need to ensure that such opportunities as the Internet wave can appear in that year.
The argument of "national champion" has been debated for decades, the United States faced this problem during the US Soviet hegemony in the 1950s and 1960s. Other countries bet on the "national champion" model, and finally the United States chose free competition**
Antitrust litigation at that time will be at & amp; In retrospect, we found that focusing on free competition is the key to ensuring innovation, which keeps the United States ahead. Therefore, we have a successful precedent on this issue.
Moderator: the Chinese market presents a unique situation. Industry insiders say that American users use more microphones and cameras called by Chinese applications than any American company. I think he means that he hopes these competitors should also face the same supervision
Lena Khan: we've seen that in the past decade, other countries have become more stringent, such as the European Commission. We see that China has taken a series of actions in the past year, which actually shows that they will vigorously implement anti-monopoly and its anti-monopoly law, which is quite different from what you expect other countries to ignore.
Moderator: what do you think of the strict management of domestic technology companies by Chinese regulators? Will American technology companies lose the excuse to say "if we are not large enough, Chinese companies will rob our market"
*Lena Khan *: Yes, it really makes the sophistry of large American companies lose strength.
Host: Although we are surprised from the perspective of national security and the national champion. What do you think is the reason for China to strengthen antitrust
Lena Khan: This is an interesting question. I don't know, but from a historical point of view, the regulation of any country will recognize that if unrestricted monopolies are allowed to concentrate their power, these monopolies can compete with the power of the state.
Just as we will set political boundaries for the government, we will also limit the boundaries of Commerce by preventing excessive concentration of commercial power
Host: do you think these companies have the strength to compete with the government now
*Lena Khan *: we do see that some companies have developed similar capabilities, especially the types of data they can access now. This is not just commercial competition, but will involve a variety of data privacy and data security issues. And I think this is a more important issue.
For antitrust regulation, we mainly look at the problem from the perspective of competition to see whether these companies monopolize in an illegal way. But obviously, in addition, there is a national perspective. Legislators have a series of drafts on similar issues, and those bills are the occasion to discuss these issues.
Winning or losing is not important, and "deterrence" is more critical
Moderator: both the FTC and the Justice Department have applied to Congress for more funds ($500 million each), but Congress has not yet approved it. Is FTC understaffed and resourced now
Lena Khan: our resources are seriously inadequate. We have about 1100 employees in FTC, about two-thirds of that in the 1980s. Our human resources have remained more or less stable, but they have actually decreased in the past decade.
The volume of M & A transactions has doubled in the past decade, and we are the same number of people responsible for investigation. The sharp increase in the number of transactions has caused great pressure. We must choose which multi billion dollar M & A case to trace to ensure the quality of investigation, but this means that there will be trade-offs and sacrifices.
Moderator: in the case of limited resources, how does FTC choose to follow up the mergers and acquisitions of which large companies
*Lena Khan *: This is a very difficult question and it will definitely make me feel stressed.
I think "deterrent" is very important. Over the past decade or so, large companies have dared to take actions that are obviously illegal and anti competitive, which means that these companies know that such actions will not have serious consequences** Even if these mergers and acquisitions are regulated and traced, they only need to file a lawsuit in court and pay some money.
What we want to see is the lack of deterrence for large companies.
What we consider is which cases can have a greater impact in the context of antitrust. The success of a case can change the atmosphere of the whole market, rather than going around**
At the same time, we are considering which cases can be traced back to the upper reaches of the industry, so that we can control the monopoly at the source. This is how we think about how to carry out antitrust supervision more effectively.
Host: in the case of Facebook, a fine of $5 billion was finally imposed, which is a drop in the bucket for these giants, and the other party's groups of lawyers, public relations and lobbyists make people feel sorry for the U.S. government
*Lena Khan *: that was before I took over as FTC chairman.
No, I think it takes courage to do so. These are large companies with abundant resources, and they are not reluctant to make full use of their resources. At such an important moment, ensure that we really show these companies and the public that law enforcement officers will not shrink back because these companies show some strength or try to intimidate us.
Host: so you won't worry about what cases will fail and worry about gain and loss
*Lena Khan *: This is a difficult assessment, but I think decisive decisions are still valuable when action should be taken.
Even if it is not a win-win case, even if there is a risk of losing, taking this risk and taking action may still bring great benefits, and you may win. If you don't take risks, you will lose**
We are already aware of the huge cost brought by repeated inaction. What we have to do is to reverse this momentum.
Moderator: does the FTC need the help of Congress? When you go to court with a large company, it still depends on the court's decision, or you can fundamentally change the law
*Lina Khan *: our job is to enforce the written law, but Congress believes that some cases prove that the law needs to be strengthened, and the sentences of some case courts can not meet the current market reality. In reality, these companies can show their market skills.
Host: will you ask Congress for help? Will you spend time discussing these issues with Congress
*Lina Khan *: legislators will seek technical assistance from antitrust authorities. It is obvious that it has been increasingly difficult to raise the monopoly cases of large companies to such a high level in the past decade. So I think Congress really wants to change that so that law enforcers can enforce the law faster and more timely without particularly worrying about losing when dealing with the worst violations.
Moderator: in addition to funds and personnel, what kind of help does FTC need from Congress, such as various privacy bills, anti discrimination bills and so on
Lena Khan: money and resources are really important. In addition, a series of court decisions do make it more difficult for institutions to act quickly. Therefore, I think the series of changes under consideration is indeed encouraging, especially the increasing interest and attention of so many parties. I think it does show that people are increasingly aware of the existence of deep-seated problems.
Host: in the case of FTC against Facebook, the judge ruled that the former "did his homework" and gave antitrust a good potential energy. What do you think of this matter
*Lina Khan *: this result is really great, so that we can continue to move forward. My colleagues fought a beautiful battle. The judge's ruling showed that FTC did "do its homework".
More importantly, through discussion, the court has been able to understand that in addition to price increases, such as damage to privacy, is also a harmful behavior, even if consumers do not pay more.
Moderator: a key issue is that users either lose privacy or lose free applications. Who should balance this contradiction, regulators, the public or the market
*Lina Khan *: according to the anti-monopoly law, it is illegal to trade how harmful to competition. The court has made it clear that it does not want to place the antitrust authorities in a position where such a balance must be made. This is a traditional practice.
But this is also a question we need to study when revising the "merger and acquisition guidelines". We need to ask people, how should FTC consider the market index and potential quality deterioration? We believe that these further investigations can provide us with greater impetus in the future.
Moderator: the COVID-19 has made us more dependent on the applications of technology giants than ever before. Without providing data for them, we cannot enjoy the functions such as maps. In such a case, what are the most important issues for regulation that may harm the interests of consumers
*Lena Khan *: that's a good question. One thing we are particularly interested in during the revision period is how to strengthen our ability to prove that those companies have monopoly power, even if they haven't raised prices yet.
At present, law enforcers have to bypass various obstacles and go deep into the case to prove the change of price. Now, there is another angle to prove that these companies are abusing their market power by looking at the deterioration of privacy problems, even if there is no price increase.
Especially in the digital market, some issues about data privacy and security are also within the concern of FTC. For example, if some companies buy a company with a higher level of data privacy, the former will get rid of this responsibility. Users will find that they now need to hand over more data, and they will feel deprived of the right to choose.
He is not a "radical" and will not directly talk to technology leaders
Moderator: your famous paper "Amazon's antitrust paradox" at Yale University made an impassioned criticism on Amazon. Some critics think you almost won the position of FTC chairman as an "activist". What do you think of this
*Lina Khan *: my goal has always been to understand the real situation of the market. I started talking to actual market participants as a reporter. You will read the headlines that a large agricultural enterprise has made a merger and acquisition, and it is said that it is great for consumers. If you dig deeply, you will see that in fact, the price of seeds rises and farmers are hurt.
Therefore, we should really dig to understand what happened under the surface. What we see is that some antitrust standards used in the past have not really fully captured the complete structure of market power and how it is exercised for decades.
So for me, the key question is actually how to ensure that our tools, frameworks and law enforcement methods match the current world. Antitrust theories and tools should evolve with the market
Moderator: big technology companies (Amazon and Facebook) tried to prevent you from participating in the monopoly case against them. Although the judge did not agree, these big companies spared no effort to portray you and Senator Elizabeth Warren as activists and anti technology people. What do you think
*Lina Khan *: as law enforcers, our responsibility is to enforce the law against large companies, so the key question is whether we can enforce the law or not. In fact, in the past, these large companies received relatively minor penalties, and then they may need to respond to more actions from law enforcers.
It's good that the court can make a penalty in favor of FTC for similar "avoidance" litigation, because I have no personal or financial bias in these antitrust cases. Therefore, for these anti-monopoly cases, we adopt a fair way to enforce the law and truly ensure an open, competitive and vigorous market environment.
If a company or monopoly company has done something illegal, we will resort to law.
Moderator: so you don't call yourself a radical or a radical regulator
Lena Khan: I'm a law enforcer. I'm honored to play this role. Our job is to really enforce the law in a fair way.
Moderator: some Internet and technology practitioners complained that FTC only focused its antitrust efforts on the Internet, but turned a blind eye to monopoly companies in other industries. What do you think of this accusation
*Lina Khan *: FTC has a wide range of regulation. Congress has given us a very arduous task, that is, to regulate the entire American economy, and we will bring challenges to mergers and acquisitions in any industry, whether it is the medical industry or the semiconductor industry, such as the merger of NVIDIA and arm. In the past, FTC has also prosecuted mergers and acquisitions in the retail sector.
Therefore, it is not comprehensive to accuse FTC of only looking at the technology industry. Both FTC and the Ministry of justice look at the whole.
Moderator: agriculture, finance and other industries have separate departments. Do you think there will be a separate department to supervise the science and technology industry
*Lena Khan *: this should be an issue that legislators need to discuss. It is indeed proposed that the FTC establish an independent Internet regulatory authority, but in the final analysis, it is up to Congress to decide. What we can do is to use the tools at hand to investigate the illegal acts as much as possible.
Moreover, FTC has accumulated a lot of experience in the field of Internet regulation. In particular, if we can have more resources and funds, we will have the opportunity to attack some monopoly behaviors. It takes a lot of effort to establish a new department. Now there are more important things to do.
Host: will you directly connect with the CEOs of technology giants? Talk to them directly
*Lina Khan *: if it is part of FTC law enforcement, this will happen, but we still ensure that we can communicate through normal channels.
Host: it's said that Internet giants are waiting for you to leave this position. Do you think they will succeed
*Lena Khan *: we will try our best to enforce the law in a fair way. I think this is an important moment. We have the opportunity to learn from the mistakes of the past and make changes. That's what we are trying to do.
Moderator: your time to control the FTC is limited. There is still one year to go before the mid-term election, and there may be a power change at that time. What do you think of your tenure
*Lena Khan *: I feel very pressed for time.
For some specific law enforcement acts, it takes a long time to investigate, even if it is submitted to the court, it also takes a long time. This puts a lot of pressure on us. We must act quickly every day to push things forward.