Feb 13, 2024 - Technology

FTC chair Khan: Stop monopolies before they happen

Photo illustration of FTC Chairwoman Lina Khan in front of a dollar bill and a cursor

Photo illustration: Sarah Grillo/Axios. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

FTC chair Lina Khan is hunting for evidence that Microsoft, Google and Amazon require cloud computing spend, board seats or exclusivity deals in return for their investments in AI startups.

Why it matters: At a Friday event, Khan framed today's AI landscape as an inflection point for tech that is "enormously important for opening up markets and injecting competition and disrupting existing incumbents."

What's happening: The FTC chair offered Axios' Sara Fischer new details of how she's handling a market inquiry into the relationship between Big Tech companies and AI startups, in an interview at the Digital Content Next Summit in Charleston, S.C.

  • In handling the surge in AI innovation and its impacts on the broader tech and media landscape, Khan said she aims to tackle monopoly "before it becomes fully fledged."
  • She said the FTC is looking for chokepoints in each layer of the AI tech stack: "chips. compute, foundational models, applications."

Khan said she's also paying close attention to vertical integration — when players look to extend dominance over one tech layer into adjacent layers — or when they attempt acquisitions aimed at solidifying an existing monopoly.

  • That includes any potential integration between Sam Altman's nascent chip project and OpenAI, though she said she welcomes chip competition: "When you have shortages and the need for more production, it's good for additional entities to be getting in the mix."

Between the lines: A former student journalist, Khan said her motivation for going after Big Tech monopolies stems partly from her view that regulatory inaction has amplified today's journalism economics crisis.

  • "Historically, we've seen how it was really important for policymakers to play an active role in structuring markets to make sure that an independent free press was viable," she said, lamenting "technological determinism" in media debates.

Zoom out: Khan's media deal focus is on how dominant players expand and then use those markets "to further solidify their primary monopolies, or give them a leg up in some of these adjacent markets in ways that can distort competition."

  • When asked whether the agency would revisit Amazon's historic $8.5 billion acquisition of MGM in 2022, Khan said, "Previous action or inaction doesn't preclude future action."

The intrigue: Khan warned against regulators developing cozy relationships with domestic companies.

  • Citing Boeing, she argued that the development of "national champions" can be "quite dangerous."

Yes, but: Khan said her enforcement tools are limited.

  • When asked to back up her claim that even failed federal lawsuits have a deterrence effect against abuses of competition, Khan didn't mention cases from her tenure, or even the 21st century — only the Justice Department's failed 1990s attempt to break up Microsoft.
  • Khan admitted it's possible for companies to treat FTC fines as a cost of doing business and said she prioritizes modifying business models and a firm's "underlying incentives" when the FTC considers penalties.

What's next: Khan wouldn't address what would happen to the FTC under a second Trump presidency except to note "strong bipartisan concern" in Congress about monopolies.

Go deeper: Watch the full interview by Axios' Sara Fischer.

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