Much discussion of Lina Khan’s suitability to chair the Federal Trade Commission in a new presidential administration has circulated in the past few weeks. In a 60 Minutes interview last weekend, Khan aimed to show she has performed well enough to maintain her role. Unfortunately, she was unable to shake the key criticisms of her tenure, demonstrating that if the next administration wants to improve American antitrust at the FTC, they must replace her.
One of the most alarming aspects of Khan’s approach is its potential to exacerbate inflation and drive up prices for consumers.
Economists of many stripes have raised concerns about the unintended consequences of her aggressive, anti-business bias. Her focus on attacking businesses, rather than the agency’s traditional focus on consumer welfare, has pushed her toward policies with inflationary risks. Her policies are blocking modern-day economies of scale and scaring businesses away from cost-reducing mergers and tactics. This will lead to a higher cost of doing business that will pass on to consumers in the form of higher prices.
The FTC’s recent actions, such as trying to block Amazon’s acquisition of iRobot, demonstrate this shortsightedness. 31% of iRobot’s workers were laid off in response. This not only lost Americans their jobs but also limited the potential for more affordable products to reach consumers.
Khan’s approach tends to benefit competitors – often multi-million dollar businesses themselves – over the welfare of everyday consumers. The American economy’s strong free market principles have created a dynamic environment where large and small businesses compete in the same marketplaces.
Progressive activists like Chair Khan think the economy needs a bigger and more burdensome government to manipulate competition, but their policies harm American consumers.
The FTC’s failed attempt to block Meta’s acquisition of Within exemplifies their faulty approach. This suit claimed that Meta’s purchase of the virtual reality fitness app developer would lessen competition in the VR fitness market. However, this argument ignored the potential benefits to consumers and the broader VR ecosystem that such an acquisition could bring.
Consumers stood to benefit from increased investment and innovation in VR technology. The VR market is still in its early stages, with numerous companies competing to develop hardware, software and content. The acquisition aimed to accelerate the development of VR fitness applications, making them more accessible and appealing to a wider audience.
Khan’s team also greatly exaggerated any potential negative impacts on consumers because the VR fitness market is still fairly small and niche. FTC resources and time spent on this issue were wasted when they could have been focused on actual consumer protection efforts.
The FTC’s lawsuit against Amazon, discussed in the 60 Minutes interview, exemplifies Khan’s faulty approach. The case is built on Khan’s claim that Amazon favors its own fulfillment center program, harming sellers who don’t participate. However, this argument ignores the huge benefits to businesses and consumers that this program creates. Other retailers are still able to sell on Amazon, and there are a huge variety of marketplaces and businesses competing with Amazon, too.
Customers benefit greatly from faster shipping and reduced prices that Amazon’s fulfillment business has excelled at. Walmart, nearly twice the size of Amazon, continues to dominate retail by emulating their practices, too, while numerous online and offline options provide consumers with unprecedented choice. This all points to a healthy and competitive environment that offers consumers choices and competitive pricing.
The FTC has overlooked the fact that Amazon’s prices are, on average, 3.5% lower than major rivals like Walmart and Target, according to a report from the Phoenix Center. This price competitiveness directly benefits consumers, yet it seems to be ignored in the FTC’s crusade.
Polls consistently show Amazon ranking as one of the most trusted brands in the world, with 84% of Americans and 92% of Republicans viewing the FTC’s lawsuit against Amazon as a waste of resources. In attempting to force Amazon to alter its practices, the FTC may harm the very sellers it claims to protect, as well as degrade services that Americans love and value like Amazon Prime.
Khan has overseen a string of costly court losses as she attempts to advance unfounded legal theories and use antitrust law as a form of activism to achieve political goals, rather than following the law as a tool to fight for consumers. The House Judiciary’s recent report outlines details Khan’s incompetence and abuse of power, including attempts to evade congressional oversight and potential misleading of Congress regarding ethics advice. Khan’s focus on high-profile, politically-motivated cases has diverted resources and attention from more pressing consumer protection needs.
Chair Khan first gained notoriety in the antitrust movement being a progressive activist with ambitious goals about tackling big business. As Chair of the FTC, this bias has carried over into her actions as many expected. Her focus on progressive ideals over the day-to-day, needed operations of one of the most important government agencies are evident, from economists to her own staff.
Chair Khan’s approach harms the very consumers the FTC is meant to protect, while undermining the agency’s credibility and effectiveness.
As inflation continues to burden Americans, it’s crucial that our regulators focus on policies that genuinely benefit consumers—not ideological agendas. The next president should replace Khan as Chair and get the FTC back on track.