[With a single scholarly article, Lina Khan, 29, has reframed
decades of monopoly law.] [https://portside.org/] 

 AMAZON’S ANTITRUST ANTAGONIST HAS A BREAKTHROUGH IDEA  
[https://portside.org/node/18117] 

 

 David Streitfeld 
 September 7, 2018
New York Times
[https://www.nytimes.com/2018/09/07/technology/monopoly-antitrust-lina-khan-amazon.html]


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 _ With a single scholarly article, Lina Khan, 29, has reframed
decades of monopoly law. _ 

 In early 2017, when she was an unknown law student, Lina Khan
published “Amazon’s Antitrust Paradox” in the Yale Law Journal.,
Brandon Thibodeaux for The New York Times 

 

The dead books are on the top floor of Southern Methodist
University’s law library.

“Antitrust Dilemma.” “The Antitrust Impulse.” “Antitrust in
an Expanding Economy.” Shelf after shelf of volumes ignored for
decades. There are a dozen fat tomes with transcripts of the
congressional hearings on monopoly power in 1949, when the world was
in ruins and the Soviets on the march. Lawmakers believed economic
concentration would make America more vulnerable.

At the end of the antitrust stacks is a table near the window. “This
is my command post,” said Lina Khan.

It’s nothing, really. A few books are piled up haphazardly next to a
bottle with water and another with tea. Ms. Khan was in Dallas quite a
bit over the last year, refining an argument about monopoly power that
takes aim at one of the most admired, secretive and feared companies
of our era: Amazon.

The retailer overwhelmingly dominates online commerce, employs more
than half a million people and powers much of the internet itself
through its cloud computing division. On Tuesday, it briefly became
the second company to be worth a trillion dollars
[https://www.nytimes.com/2018/09/04/technology/amazon-stock-price-1-trillion-value.html?module=inline].

If competitors tremble at Amazon’s ambitions, consumers are mostly
delighted by its speedy delivery and low prices. They stream its
Oscar-winning movies and clamor for the company to build a second
headquarters in their hometowns. Few of Amazon’s customers, it is
safe to say, spend much time thinking they need to be protected from
it.

But then, until recently, no one worried about Facebook, Google or
Twitter either. Now politicians, the media, academics and regulators
are kicking around ideas that would, metaphorically or literally, cut
them down to size. Members of Congress grilled social media
executives on Wednesday
[https://www.nytimes.com/2018/09/05/technology/lawmakers-facebook-twitter-foreign-influence-hearing.html?module=inline] in
yet another round of hearings on Capitol Hill. Not since the
Department of Justice took on Microsoft in the mid-1990s has Big Tech
been scrutinized like this.

Amazon has more revenue than Facebook, Google and Twitter put
together, but it has largely escaped sustained examination. That is
beginning to change, and one significant reason is Ms. Khan.

At the S.M.U. library in Dallas, Ms. Khan was finding inspiration from
books that predated the price-based era of monopoly law. Brandon
Thibodeaux for The New York Times

In early 2017, when she was an unknown law student, Ms. Khan
published “Amazon’s Antitrust Paradox”
[https://www.yalelawjournal.org/note/amazons-antitrust-paradox] in
the Yale Law Journal. Her argument went against a consensus in
antitrust circles that dates back to the 1970s — the moment when
regulation was redefined to focus on consumer welfare, which is to say
price. Since Amazon is renowned for its cut-rate deals, it would seem
safe from federal intervention.

Ms. Khan disagreed. Over 93 heavily footnoted pages, she presented the
case that the company should not get a pass on anticompetitive
behavior just because it makes customers happy. Once-robust monopoly
laws have been marginalized, Ms. Khan wrote, and consequently Amazon
is amassing structural power that lets it exert increasing control
over many parts of the economy.

Amazon has so much data on so many customers, it is so willing to
forgo profits, it is so aggressive and has so many advantages from its
shipping and warehouse infrastructure that it exerts an influence much
broader than its market share. It resembles the all-powerful railroads
of the Progressive Era, Ms. Khan wrote: “The thousands of retailers
and independent businesses that must ride Amazon’s rails to reach
market are increasingly dependent on their biggest competitor.”

The paper got 146,255 hits, a runaway best-seller in the world of
legal treatises. That popularity has rocked the antitrust
establishment, and is making an unlikely celebrity of Ms. Khan in the
corridors of Washington.

She has her own critics now: Several leading scholars have found fault
with Ms. Khan’s proposals to revive and expand antitrust, and some
have tried to dismiss her paper with the mocking label “Hipster
Antitrust.” Unwilling or perhaps unable to accept that a woman wrote
a breakthrough legal text, they keep talking about bearded dudes.

Ms. Khan was born in London to Pakistani parents who emigrated to the
United States when she was 11. She is now 29, an Amazon critic whose
Amazon account is largely inactive, newly married to a Texas doctor
who uses his Amazon Prime account all the time. Ms. Khan was supposed
to move this summer to Los Angeles, where she had a clerkship with
Stephen Reinhardt, the Ninth Circuit Court of Appeals judge and
liberal icon, but he suddenly died in March
[https://www.nytimes.com/2018/04/02/obituaries/stephen-reinhardt-liberal-lion-of-federal-court-dies-at-87.html?module=inline].
Instead, Ms. Khan is set to start a fellowship at Columbia this fall,
and is considering other projects as well. There is no shortage of
parties that want her advice on how to reckon with Big Tech.

“As consumers, as users, we love these tech companies,” she said.
“But as citizens, as workers, and as entrepreneurs, we recognize
that their power is troubling. We need a new framework, a new
vocabulary for how to assess and address their dominance.”

At the S.M.U. library in Dallas, Ms. Khan was finding that vocabulary.
These dead books, many from an era that predated the price-based era
of monopoly law, were an influence and an inspiration. She was
planning to expand her essay into a book, she said in an interview
here in June.

Then her life shifted, and she abruptly went from an outsider
proposing reform to an insider formulating policy. Rohit Chopra, a new
Democratic commissioner at the Federal Trade Commission, pulled her in
as a temporary adviser in July, at a time when urgent questions about
privacy, data, competition and antitrust were suddenly in the air. The
F.T.C. is holding a series of hearings this fall, the first of their
type since 1995, on whether a changing economy requires changing
enforcement attitudes.

The hearings will begin on Sept. 13
[https://www.ftc.gov/news-events/events-calendar/2018/09/ftc-hearing-1-competition-consumer-protection-21st-century] at
Georgetown University Law Center. Two panels will debate whether
antitrust should keep its narrow focus or, as Ms. Khan urges, expand
its range.

“Ideas and assumptions that it was heretical to question are now
openly being contested,” she said. “We’re finally beginning to
examine how antitrust laws, which were rooted in deep suspicion of
concentrated private power, now often promote it.”

Genuinely original voices are rare in Washington policy circles, and
Mr. Chopra is pleased to have Ms. Khan in his camp. “It’s rare to
come across a legal prodigy like Lina Khan,” he said. “Nothing
about her career is typical. You don’t see many law students publish
groundbreaking legal research, or research that had such a deep impact
so quickly.”

Jeff Bezos, the founder of Amazon. David Ryder/Getty Images

Then: Rockefeller. Now: Bezos.

Ida Tarbell, the journalist whose investigation of Standard Oil helped
bring about its breakup, wrote this about John D. Rockefeller
[http://www.reformation.org/mcclure-rockefeller.html] in 1905:

“It takes time to crush men who are pursuing legitimate trade. But
one of Mr. Rockefeller’s most impressive characteristics is
patience. … He was like a general who, besieging a city surrounded
by fortified hills, views from a balloon the whole great field, and
sees how, this point taken, that must fall; this hill reached, that
fort is commanded. And nothing was too small: the corner grocery in
Browntown, the humble refining still on Oil Creek, the shortest
private pipeline. Nothing, for little things grow.”

When Ms. Khan read that, she thought: Jeff Bezos.

Her Yale Law Journal paper argued that monopoly regulators who focus
on consumer prices are thinking too short-term. In Ms. Khan’s view,
a company like Amazon — one that sells things, competes against
others selling things, and owns the platform where the deals are done
— has an inherent advantage that undermines fair competition.

“The long-term interests of consumers include product quality,
variety and innovation — factors best promoted through both a robust
competitive process and open markets,” she wrote.

The issue Ms. Khan’s article really brought to the fore is this: Do
we trust Amazon, or any large company, to create our future? In think
tanks and universities, the battle has been joined.

“It’s one thing to say that antitrust enforcement has gotten far
too weak,” said Daniel Crane, a University of Michigan scholar who
doesn’t agree with Ms. Khan but credits her with opening up a
much-needed debate. “It’s a bridge much further to say we should
go back to the populist goal of leveling playing fields and checking
‘bigness.’ ”

As Mr. Crane writes in a forthcoming law review article
[https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1264&amp=&context=law_econ_current&amp=&sei-redir=1&referer=https%253A%252F%252Fwww.google.com%252Furl%253Fq%253Dhttps%253A%252F%252Frepository.law.umich.edu%252Fcgi%252Fviewcontent.cgi%253Farticle%25253D1264%252526context%25253Dlaw_econ_current%2526sa%253DD%2526source%253Dhangouts%2526ust%253D1536207313850000%2526usg%253DAFQjCNE_HOt_Sn9-tVjtGaIY6BmPZlkpeA#search=%22https%3A%2F%2Frepository.law.umich.edu%2Fcgi%2Fviewcontent.cgi%3Farticle%3D1264%26context%3Dlaw_econ_current%22]:
“Antitrust law stands at its most fluid and negotiable moment in a
generation.”

The resistance is fierce and prominent. Herbert Hovenkamp, an
antitrust expert at the University of Pennsylvania Law School, wrote
that if companies like Amazon are targeted
[https://scholarship.law.upenn.edu/faculty_scholarship/1769/] simply
because their low prices hurt competitors, we might “quickly drive
the economy back into the Stone Age, imposing hysterical costs on
everyone.”

Timothy Muris, a former chairman of the F.T.C., and Jonathan
Nuechterlein, a former F.T.C. general counsel, published a paper in
June that was a response to Ms. Khan and the antitrust reform
movement. Called “Antitrust in the Internet Era,”
[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3186569] it was
about the A.&P. grocery chain.

A.&P. essentially invented the modern supermarket in the 1920s. With
its low prices, wide range of products and penchant for disruption,
the chain became the leading retailer of its era. It owned 70
factories and eliminated middlemen, which allowed it to keep costs
down. Yet, Mr. Muris and Mr. Nuechterlein wrote, “A.&P.’s very
popularity triggered a backlash.” The government pursued A.&P. on
antitrust grounds during the 1940s, egged on by competitors that could
not compete. After decades of decline, A.&P. shut its doors for good
[https://www.nytimes.com/2015/07/21/business/ap-files-for-bankruptcy-and-aims-to-sell-120-stores.html?module=inline] in
2015.

The analogies with Amazon are explicit. Don’t let the government
pursue Amazon the way it pursued A.&P., Mr. Muris and Mr. Nuechterlein
warned.

“Amazon has added hundreds of billions of dollars of value to the
U.S. economy,” they wrote. “It is a brilliant innovator” whose
“breakthroughs have in turn helped launch new waves of innovation
across retail and technology sectors, to the great benefit of
consumers.”

Amazon itself could not have made the argument any better. Which
isn’t surprising, because in a footnote on the first page, the
authors noted: “We approached Amazon Inc. for funding to tell the
story” of A.&P., “and we gratefully acknowledge its support.”
They added at the end of footnote 85: “The authors have advised
Amazon on a variety of antitrust issues.”

Amazon declined to say how much its support came to in dollars. It
also declined to comment on Ms. Khan or her paper directly, but issued
a statement.

“We operate in a diverse range of businesses, from retail and
entertainment to consumer electronics and technology services, and we
have intense and well-established competition in each of these
areas,” the company said. “Retail is our largest business today
and we represent less than 1 percent of global retail.”

“As consumers, as users, we love these tech companies,” Ms. Khan
said. “But as citizens, as workers, and as entrepreneurs, we
recognize that their power is troubling. We need a new framework, a
new vocabulary for how to assess and address their dominance.” Lexey
Swall for The New York Times

‘We’re at the Very Beginning of Solutions to This’

The first time Ms. Khan held power to account involved a Starbucks in
suburban New York that was banning students from sitting down. Ms.
Khan decided to write an article about the policy; Starbucks
wouldn’t answer her questions, but she managed to interview the
employees. The New York Times picked up on the tempest
[https://www.nytimes.com/2004/10/17/nyregion/education/a-tempest-in-a-coffee-shop.html],
leaning on her reporting. Ms. Khan was 15, a correspondent for her
high school newspaper.

Her father was a management consultant; her mother an executive in
information services. Ms. Khan went to Williams College, where she
wrote a thesis on the political philosopher Hannah Arendt. She was the
editor of the student paper but worked hard at everything.

“We were routinely emailing each other on separate floors of the
library as it was closing at 2 a.m.,” said Amanda Korman, a
classmate.

Like many a wonkish youth, Ms. Khan headed to Washington after
graduating in 2010, applying for a position at the left-leaning New
America Foundation. Barry Lynn, who headed the organization’s Open
Markets antimonopoly initiative, seized on her application. “It’s
so much easier to teach public policy to people who already know how
to write than teach writing to public policy experts,” said Mr.
Lynn, a former journalist.

Ms. Khan wrote about industry consolidation and monopolistic practices
for Washington publications that specialize in policy, went to Yale
Law School, published her Amazon paper and then came back to
Washington last year, just as interest was starting to swell in her
work.

In the summer of 2017, Open Markets was ejected from New America amid
messy accusations that it displeased Google
[https://www.nytimes.com/2017/08/30/us/politics/eric-schmidt-google-new-america.html?module=inline],
a prominent funder, after the company was rebuked by European
regulators for anticompetitive behavior. The think tank is now
independent.

“Polls show huge concerns about concentrated power, corporate power,
but if people are asked, ‘Do we have a monopoly problem?’ they
answer, ‘I don’t know,’ ” said Mr. Lynn. “They don’t have
the language for it.”

Amazon’s $14 billion purchase of Whole Foods
[https://www.nytimes.com/2017/06/16/business/dealbook/amazon-whole-foods.html?module=inline] in
the summer of 2017 — a startling move into physical retail — was
almost a watershed, but not quite. Rep. David Cicilline of Rhode
Island, the ranking Democrat on the Subcommittee on Regulatory Reform,
Commercial and Antitrust Law, called for hearings but did not get
them.

“The whole country has been struggling to understand why the economy
is not operating in the right way,” Mr. Cicilline said. “Wages
have remained stagnant. Workers have less and less power. All we’re
trying to do is create a level playing field, and that’s harder when
you have megacompanies that make it virtually impossible for small
competitors.” He added, “We’re at the very beginning of
solutions to this.”

Somewhere in the midst of all this, Ms. Khan found the time to marry
Shah Ali, a doctor now doing a cardiology fellowship in Dallas, which
explains why she was camping out at the S.M.U. law library. The
honeymoon was in Hawaii. Dr. Ali took Jane Austen’s
“Persuasion,” because he hadn’t reread it in a while. Ms. Khan
brought a book on corporations and American democracy.

“It’s rare to come across a legal prodigy like Lina Khan,” said
Rohit Chopra, a new Democratic commissioner at the Federal Trade
Commission. “Nothing about her career is typical. You don’t see
many law students publish groundbreaking legal research, or research
that had such a deep impact so quickly.” Lexey Swall for The New
York Times

‘The New Brandeisians’ Lacks a Certain Something

The battle for intellectual supremacy takes place less these days in
learned journals and more on social media, where tongues are sharp and
branding is all. This is not Ms. Khan’s strong suit. She is always
polite, even on Twitter. One consequence is that she didn’t give
much thought about what to call the movement to reboot antitrust.
Neither did anyone else.

That presented an opening for the reformers’ critics, who have tried
with a limited degree of success to popularize the term “Hipster
Antitrust.” Konstantin Medvedovsky, an antitrust lawyer in New York,
came up with the label last summer in a tweet
[https://twitter.com/kmedved/status/876869328934711296] that was
responding to a tweet that was responding to a tweet by Ms. Khan.

“Antitrust Hipsterism,” he wrote. “Everything old is cool
again.”

Mr. Medvedovsky, who calls Ms. Khan’s article “the face of this
movement,” said the term was designed to be “playful rather than
pejorative.”

Admirers of Ms. Khan and her fellow reformers have sometimes called
them the New Brandeis School or the New Brandeisians, after Louis
Brandeis, the Progressive Era foe of big business. As brands go, these
are somewhat less catchy than “Hipster Antitrust.”

The April issue of the journal Antitrust Chronicle
[https://www.competitionpolicyinternational.com/wp-content/uploads/2018/05/AC_APRIL.pdf],
edited by Mr. Medvedovsky, features a drawing of a bearded man on the
cover right above the words “Hipster Antitrust.” In the middle of
an article by Philip Marsden, a professor of competition law and
economics at the College of Europe in Bruges, there’s a photograph
of a bearded man taking a selfie next to the chapter heading “Battle
of the Beards.” It is perhaps relevant that only one of the 12
authors or experts in the issue is female.

The Hipster issue was sponsored by Facebook, another sign that Big
Tech is striving to shape the monopoly-law debate. The company
declined to comment.

Things are moving fast, so there is a lot to write papers about.

Mr. Chopra, with Ms. Khan’s assistance, pushed the argument further
on Sept. 6 with a 14-page official comment
[https://www.ftc.gov/system/files/documents/public_statements/1408196/chopra_-_comment_to_hearing_1_9-6-18.pdf] that
suggested the F.T.C. bring back a tool buried in its toolbox: the
ability to make rules.

Contemporary antitrust regulation, the commissioner wrote, is
conducted in the courts, which makes it numbingly slow and dependent
on high-paid expert witnesses. He called for the agency to use its
authority to issue rules that would “advance clarity and
certainty” about what is, and what is not, an unfair method of
competition.

These rules would not be “some inflexible prescription” but
standards, guidelines, pointers or presumptions, he wrote. Since
everyone affected by a proposed rule would have the opportunity to
weigh in on it, the process would be more democratic.

There is more than an echo here of Ms. Khan’s notion that the past
can help rescue the future.

“These are new technologies and new business models,” Ms. Khan
said. “The remedy is new thinking that is informed by traditional
principles.”

Antitrust Foot Soldiers

Big Tech’s great strength is that it is everywhere. Hardly anyone
can live without it
[https://www.nytimes.com/interactive/2017/05/10/technology/Ranking-Apple-Amazon-Facebook-Microsoft-Google.html?module=inline].
But that omnipresence can be a weakness too. Just ask Facebook. It was
the only global social media network, an enviable position — until
it wasn’t. Ideas for regulating Facebook that were once unimaginable
are now on the table.

Ms. Khan was not the first to criticize Amazon, and she said the
company was not really her target anyway. “Amazon is not the problem
— the state of the law is the problem, and Amazon depicts that in an
elegant way,” she said.

From Amazon’s point of view, however, it is a problem indeed that
Ms. Khan concludes in the Yale paper that regulating parts of the
company like a utility “could make sense.” She also said it
“could make sense” to treat Amazon’s e-commerce operation like a
bridge, highway, port, power grid or telephone network — all of
which are required to allow access to their infrastructure on a
nondiscriminatory basis.

Ms. Khan put those ideas out there, which is how Rachel Tsuna found
them.

Last fall, the Barnard College senior was casting about for a subject
for her senior thesis. “What is really interesting to you?” her
adviser asked. Ms. Tsuna, now 22, had worked for a chewing gum
start-up — yes, there are such things — that sold through Amazon,
and knew firsthand the retailer’s tight grip. “Amazon is scary!”
she exclaimed.

This impulsive declaration suggested a topic: Did the F.T.C. have the
grounds to move against Amazon? Ms. Tsuna made little progress until
she came across Ms. Khan’s paper.

“I finally felt like I was pursuing something valid,” Ms. Tsuna
said. “Lina Khan gave me the confidence I needed.” The thesis,
which is quite fair to Amazon, got an A minus.

That’s the way movements begin. Little things grow.

“This is a moment in time that invites a movement,” said Ms. Khan.
“It’s bigger than antitrust, bigger than Big Tech. It’s about
whether the laws serve democratic ends.”

It was late at night in late July, and she was eating a burrata
concoction at a popular restaurant near the Washington apartment she
uses when not in Texas with her husband. After the death of Judge
Reinhardt, her options opened up. She had the Columbia fellowship.
Maybe she would also write the book. Or go back to the F.T.C. full
time. Or somehow do it all.

“Amazon is a monopoly, and I worry that it monopolizes Lina,” said
her husband, Dr. Ali. “I learn about what she is doing from looking
at her Twitter feed.”

“I throw myself into things,” Ms. Khan agreed. “My life is
spread out now.”

With some cajoling, she revealed her Amazon account. There were just
three purchases in 18 months. An altimeter for her father, who has
taken up hiking, is the only one she will agree to have mentioned,
although the other two are incredibly benign. One attribute Ms. Khan
shares with Amazon is a strong desire to control the flow of
information.

Somewhat to her surprise, she is becoming a public figure. Before
beginning her stint at the F.T.C., she said the news of her working
there might be no more than a sentence or two at news sites that cover
policy intensively. Instead it was a full-fledged story. The
Information, a tech news site, declared: “Amazon Antitrust Push
Slowly Gains Ground.”
[https://www.theinformation.com/articles/amazon-antitrust-push-slowly-gains-ground]Politico
just named her one of the Politico 50,
[https://www.politico.com/interactives/2018/politico50/lina-khan/] its
annual list of the people driving the ideas driving politics.

Balancing the attention and the achievement, the expectations and the
demands, is difficult, perhaps impossible.

“I don’t think of my work in grandiose terms. I feel an urgency
but I’m also wary of hubris,” Ms. Khan said. “Nobody has been
expecting this to succeed. I’m awed by the challenge.”

_Follow David Streitfeld on Twitter: @DavidStreitfeld
[https://twitter.com/DavidStreitfeld]._

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