Capitalisn’t: Lina Khan’s Vision of Capitalism

Lina Khan: I think a system where you’re instead allowing more, effectively, central planning by a handful of monopolists, rather than forcing those monopolists to also look over their shoulder and make sure that they’re increasing their speed if there are upstarts behind them, I think that there are real downsides there.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Luigi: As every Capitalisn’t listener and reader of my work knows, I’m fascinated by all things antitrust. So, of course, I paid attention to Lina Khan since long before President Biden appointed her as the chair of the Federal Trade Commission.

Her 2016 Yale Law Journal note, “Amazon Antitrust Paradox,” argued that focusing narrowly on consumer prices, some form of the consumer-welfare standard, fails to detect modern forms of monopoly power. The reason why Amazon did not get in trouble with antitrust is because they were so clever, rigorously following the rules of antitrust today, defying the substance but following the rules.

Lina is what is known as a new Brandeisian. She does not think that antitrust should only maximize the consumer-welfare standard, but she’s concerned about more general power that firms have—in particular, large firms.

Her work has generated a lot of fire, even before she was appointed to the FTC. She was accused of wanting to protect competitors over consumers. Her style of antitrust was even described in derogatory terms by a rival as “hipster antitrust.”

Bethany: If you don’t believe us that antitrust is fascinating and important, another measure of both those things is the sheer amount of anger that was directed at Lina Khan during her years as FTC chair.

Private equity and venture capitalists blamed the chilling effect of her policies for their inability to cash out of investments by selling them to other firms. Detractors in Congress claimed that Khan’s efforts went beyond protecting competition. One representative said that she would stop at nothing to achieve the radical left’s goals in reshaping industry. Business lobbying groups complained that the constant threat of FTC intervention under Khan was chilling the economy.

At the same time, she was criticized for a lack of success. The FTC lost several big challenges, including the Microsoft-Activision deal and an acquisition that Meta was trying to make. Detractors cite these defeats as evidence that her theories simply don’t hold up under existing antitrust law.

Even the FTC’s proposal to ban noncompete clauses in employment contracts was denounced as a breathtaking power grab by industry observers. Just last fall, the House Committee on Oversight and Accountability released a staff report entitled “The Federal Trade Commission Under Chair Lina Khan: Under Biden White House Influence and Sweeping Destruction of Agency Norms.”

She’s even gotten the blame for things she didn’t do: most notably, the failure of Spirit Airlines, which came after the government contested its merger with JetBlue. But that was actually the Justice Department, which also has jurisdiction over mergers.

While you might think some of this criticism was partisan, and some of it was, that’s not entirely true. A whistleblower from inside the FTC quit alleging all kinds of wrongdoing. Prominent Democratic donors like Reid Hoffman, Barry Diller, and Mark Cuban called for Lina Khan’s removal.

Luigi: If she’s so controversial, she must be doing something right.

The funny thing is that most businesspeople expected the Trump administration to beat a quick retreat from her policies, despite the fact that JD Vance had publicly praised her. Instead, the Trump administration continued to pursue the cases against Google and Meta. And it’s worth noting the Google case was originally brought under the Trump administration.

Bethany: Needless to say, we were eager to talk to Lina as soon as she was able to do so. With no further ado, here she is.

Luigi: I have a pretty big question to begin with. What is your vision of capitalism?

Lina Khan: Well, my vision of capitalism includes an important role for market competition. I think our capitalist system in the United States has been responsible for driving so much innovation and growth, but a key ingredient there has been making sure that upstarts and innovators and people with a good idea can get a fair shake. If you’re undertaking certain risks, you should be able to reap the rewards of that risk if your product or service is succeeding. I think that’s a critical component here in why antitrust and antimonopoly has been such an ingredient.

Luigi: Imagine that I am a factory worker in Ohio. How would you respond if I asked you, how did your tenure at the FTC change my life?

Lina Khan: It’s a really important question and, actually, a question that I kept top of mind during my entire tenure. In healthcare, we were especially active in taking on the illegal tactics that inflate drug prices. Because of the FTC’s work, for example, asthma inhalers today cost less than they did five years ago. Asthma inhalers have been around for decades. But through various patenting tricks, the dominant manufacturers were keeping out generics from the market. After we challenged those tactics, three of the four big manufacturers said they were going to drop the out-of-pocket cost from hundreds of dollars down to $35.

The FTC’s work has also made it easier to repair your own product. Through a whole series of lawsuits, we took on the illegal repair restrictions that mean that farmers can’t easily fix their own tractors or people can’t easily take their phone to an independent repair shop and instead have to go to the manufacturer. This was an area where we had not seen much enforcement for many, many years, even as companies were switching more to services and, therefore, benefiting from repairs being an increasing source of profitability.

The FTC’s work on labor markets was extraordinarily significant. We finalized a rule that would ban noncompete clauses. That is now being litigated, but the FTC’s lawsuits already resulted in noncompetes being dropped for thousands upon thousands of workers.

We stopped major mergers that would have reduced competition in areas like grocery retail. The Kroger-Albertsons merger, for example, would have been the biggest grocery merger in US history. The FTC successfully blocked that.

We successfully blocked over half a dozen hospital mergers that would have resulted in various parts of the country paying more for hospital services even as quality went down. I would say the agency really punched above its weight, given what a small institution we are, and really achieved win after win for the American people.

Bethany: As I was reading up before this, I thought, everybody says they’re pro-competition. You say you are; your foes say that they’re pro-competition. I thought there was a very ironic note in this idea that your effort to ban noncompetes is somehow anticompetitive, which got me thinking about the way in which people use words.

Silicon Valley, for instance, would say that they are very pro-competition, and yet you wrote in a recent op-ed that these companies have been arguing that the government must protect them from competition to ensure that America stays ahead. How do you think about the use of that word, competition, and how do you think different people mean it?

Lina Khan: Well, noncompetes are literally called noncompetes. So, I think there is something slightly self-evident going on there.

I think people are probably most familiar with the idea of competition from sports. When you’re playing a game, there is a certain set of rules, but within the confines of the rules, you’re trying to win. You’re trying to beat the other team or the other person.

What we’ve seen is that through certain business tactics, firms can actually try to squash the competition or shut out the competition, and so get ahead not by doing better, but instead by what you might in the sports context call cheating. Injuring the other player, trying to rig the playing field in some way. Making sure you’re really promoting fair competition, fair dealing, is what antitrust is about.

Bethany: What do you make of the argument oft-voiced throughout history that antitrust regulators should be hands-off because we need to see America succeed? You wrote this in a recent op-ed that tech companies have been arguing that the government must protect them from competition to ensure that America stays ahead. Even Mark Cuban said a version of that, which is that breaking up big tech companies might put the US at a disadvantage.

Should that argument that America’s well-being is at stake affect what an antitrust regulator does, that there’s a bigger picture here, or should it not? And is it used often to deflect attention from the real issue, or is it used in good faith?

Lina Khan: I won’t opine on what are the motives of the people making these arguments, though oftentimes they are coming from the subjects of antitrust enforcement.

It’s true, this argument goes back decades. When the Justice Department was initially preparing a lawsuit against AT&T back in the 1950s, we saw them encourage the Defense Department to weigh in on how acting against at AT&T could undermine the United States’ national security. We’ve seen versions of those arguments made.

What we’ve also seen is that a key driver of America’s innovative spirit and a competitive edge internationally has been the fact that we are not just coddling our incumbents. We are allowing upstarts and innovators to also get out ahead, and I think a system where you’re instead allowing more, effectively, central planning by a handful of monopolists, rather than forcing those monopolists to also look over their shoulder and make sure that they’re increasing their speed if there are upstarts behind them, I think that there are real downsides there.

We’ve seen that economies that then instead double down on the national-champions approach, including Japan, in certain instances, actually fell behind. Whereas the US taking action against Microsoft, for example, ended up being really important in making sure that the market was open and that the upstarts, including Google and Facebook and Amazon, were able to actually scale rather than get squashed in the crib by Microsoft.

I think the national-security argument in the context of big tech is really fascinating, given some of the entanglements and dependencies that these firms have, including in China. I think we’ve been seeing more revelations, including recently from a whistleblower who had been at Facebook, about the types of accommodations that these firms have tried to make, especially to China, because of their market incentives.

I think we should be very leery of assuming that these companies are patriots first rather than profit-maximizing, shareholder-responsive entities that are going to put their business interests first, even when that means cozying up to nations that may not have their interests aligned with the United States.

Bethany: Your foes simultaneously point out that the FTC lost a lot of the cases that you brought, but also that you singlehandedly destroyed the American merger economy and destroyed capitalism. Talk us through how both those things can be true or if you would refute either one.

Lina Khan: I think some of the critiques have, at various points, been pretty divorced from reality. When I came in, it was true that for decades, the antitrust agencies had taken a more hands-off approach to market consolidation and to mergers and acquisitions.

Take the tech industry, where we saw the Big Five tech companies make over 800 acquisitions over the period of a decade, with not a single one being blocked and just a handful even being closely scrutinized. In areas like healthcare, we have seen a huge surge in consolidation, with higher costs and worse service as a result. Take an area like rental cars, where we now have three major players. Oftentimes, there can be an illusion of choice because when you go to the airport, you’ll see six or seven brands, but those brands are actually just controlled by three companies.

When the FTC was reviewing one of those mergers, they decided, yes, there were problems, but they would allow it to go through as long as some of the assets would be divested to another company. That other company ended up going bankrupt, and the original merging companies ended up buying back those assets at a lower price.

The remedies that the agencies had been pursuing, in some instances, had failed catastrophically, and practically, this meant that in people’s day-to-day lives, they had fewer choices, they were paying higher prices, workers had fewer employment options, and their wages were suffering as a result. Overall, our markets were more centralized and less open and competitive in ways that really do encourage entrepreneurship and startup and business dynamism.

We decided that we were going to be much more skeptical, especially in the context of huge deals that would dramatically consolidate a market, and that we were going to be much more leery of remedies if they weren’t actually going to fix the problem.

In both of those instances, we saw real results. We filed major lawsuits, we had a win rate that was over 95 percent, and most importantly, we created deterrence in the marketplace.

One of the things that was most shocking to me was hearing from antitrust lawyers and senior dealmakers that before the Biden administration, as they were contemplating deals, antitrust risk would not be talked about at all. If it were, it would come up at the very end, once the main factors had already been worked out.

If I’m a law enforcer, I want to make sure firms are staying on the right side of the law, and they should be figuring out right away if a deal that they’re contemplating is illegal, and if so, they shouldn’t pursue it. The idea that firms, as a result of the FTC’s vigorous approach, were having to start thinking about the legal risk on day one, rather than months down the line, was a real positive.

Luigi: When I hear your answers to my previous question and to Bethany’s questions, I feel that there is a lot that can reach ordinary human beings. If I were a consultant for Kamala Harris, I would say you should run on the record of Lina Khan at the FTC.

After all, I’m sorry to say, the Biden administration did not have a lot of victories to run on, at least on the popular front. Especially with the slogan “Kamala for the people,” you would expect that your agenda would become at the center of the campaign. Maybe I missed it, but I didn’t hear a squeak about that. If anything, there was some squeak from some of the funders who wanted to fire you. Why is that the case? More importantly, is there a future for an antitrust agenda in the Democratic platform?

Lina Khan: I’m not a campaign strategist or a political operative, so I can’t speak to the specific decisions that campaigns made. But as a general matter, I think what we are seeing right now under the Trump administration is a huge set of concerns about concentrated economic power, about oligarchy.

You have huge rallies being led by Senator Sanders and Congresswoman Ocasio-Cortez around the country, where you have tens of thousands of people coming out really upset and angry about the deep concentration of economic power, which sits upstream from so many challenges that we face in our day-to-day lives.

There are a lot of open questions about what the future is going to look like, what the future of the Democratic Party is going to look like, but at a grassroots level, I think we see enormous hunger from people for elected officials and for government to stand up for them, especially when it means taking on lawbreaking corporations that, on a day-to-day level, are making their life worse off.

Bethany: I think you’ve argued that Trump’s firing of Democratic FTC commissioners is a sign of Trump protecting billionaire donors, and yet, there’s the Google case and the Meta case. Andrew Ferguson, your successor, has said that he was going to reverse Lina Khan’s antibusiness agenda and stop Lina Khan’s war on mergers. Yet do you see any common ground, or do you think what is happening now is a complete reversal of the policies you had accomplished, and then how much of your work can be undone?

Lina Khan: On the antitrust side, we’ve actually seen a striking degree of continuity. The Trump administration has agreed to keep the merger guidelines that we put in place at the end of 2023.

They have kept in place the new Hart-Scott-Rodino form that we introduced, which is kind of in the weeds, but it’s the form that companies have to fill out and the information they have to submit when they are pursuing a reportable transaction. We had introduced a form that was basically a game changer. Private equity, in particular, was very upset about it, but they’ve kept that in place. They are continuing with many of the lawsuits, the trial against Facebook.

I think on the consumer-protection side, because that’s work FTC does as well, we have seen a major slowdown.

Luigi: When you mentioned, for example, Bernie Sanders, you mentioned more concerns about concentration of power and democracy in general, which are very legitimate, but maybe less of a concern for the average worker.

Many of your victories have been obtained on very traditional grounds in the sense that the stuff that you mentioned that matters to the average American is not some sophisticated theory or new theory. It is just old-fashioned antitrust enforcement.

I remember you were on our podcast many years ago describing the Brandeisian approach to antitrust. I would like to ask you, to what extent was your tenure at FTC more enforcement of traditional antitrust, and to what extent was it a new view of antitrust? Also, if you could point out for many of our listeners who will not be familiar with it, what is Brandeisian about the new approach that you achieved?

Lina Khan: I think sometimes these terms get thrown around. The key axes that I view as relevant are, are you being faithful to the law, to the laws that Congress wrote and what they were trying to achieve with them? Then, are you being effective? Are you really responding to market realities as they exist, rather than operating based on certain assumptions about how markets work or theories about how markets work that actually are pretty divorced from what’s happening on a day-to-day level?

I think there was a pretty radical effort in the 1980s to abandon the laws as written and to really adopt a more vibes-based approach to antitrust, where it was just the writings of a handful of economists. One of the things we did was actually go back and look at what the law says, look at what all of the Supreme Court opinions say. We found that in several instances, the agencies had actually been handicapping themselves and not making full use of the laws and the tools that Congress had given them.

The other big difference, I would say, is learning from the missed opportunities of the last few decades and learning from the instances where the agencies got it wrong. It’s publicly known that the FTC investigated Google in the early 2010s and ultimately did not bring an enforcement action. One of the key assumptions that later became public that the agency had made at the time was that smartphones were going to be a real niche part of the market and that desktop was going to continue to dominate.

When you are making enforcement decisions based on assumptions about what’s happening in markets that are getting it totally wrong, you really need to sit up straight and figure out what’s going on here. One of the changes that I made at the FTC was making sure that we were regularly engaging with market participants, and that doesn’t just mean lobbyists and fancy lawyers, but actually, farmers and pharmacists and independent grocers and startups.

We also made sure that the internal expertise of the agency was more methodologically diverse. Every tool and skillset can have its advantages but also have its own blind spots. We wanted to make sure we were staffing up with I/O economists, but also with labor economists, with accountants.

I also started a new office of technology, which we quickly staffed up with data scientists, data engineers, experts in AI, people who could sit alongside our lawyers and economists and, especially as the tech companies were producing data and information, really help translate and figure out what’s going on with this algorithm. That was a game changer. Several of the lawsuits that we brought included information, included theories, that we were only able to pursue because we had technologists that were able to look under the hood and figure out what was going on.

Luigi: At the latest Stigler Antitrust Conference, one of your adversaries, Sean Heather, a senior vice president of the US Chamber of Commerce, said: “Oh, we respect Chairman Khan, respect everything, et cetera. But these people were trying to change antitrust without passing it through Congress.” And with a little bit of guff, he said, “We’re very democratic, and so, we want this stuff to take place only when it has the seal of approval of the representatives of the American people.” What is your reaction to this criticism?

Lina Khan: Well, look, I think the most radically antidemocratic action that was taken in antitrust was to decide that enforcers didn’t have to enforce the law. You have laws like the Robinson-Patman Act, which goes back all the way to the 1930s, which the FTC and DOJ decided just didn’t sound sensible to them, and so, they were going to stop enforcing it. That is grotesquely undemocratic and really threatens the rule of law.

Similarly, we’ve seen efforts to import into antitrust values or words or standards that appear nowhere in the text of what Congress wrote, nowhere in the text of the opinions that the Supreme Court has been issuing. I think we were actually looking to undo a lot of the antidemocratic work that had been done in prior administrations to pretend that the antitrust laws are not actually about checking extreme concentrations of economic power and making sure that we have checks and balances in the commercial sphere through market competition.

Bethany: Do we need new laws? Was there ever a moment at which you were frustrated by the limits of the existing laws? Will the existing laws serve us well in a world of AI, or does Congress need to be thinking about what new laws would make sense?

Lina Khan: Certainly, there’s always an opportunity for clarification, for correction. I think we’re going to learn a lot in the coming years, given that a lot of these big tech cases are now resulting in opinions from courts. Congress can look at, say, the verdicts being issued on Google, in the future on Facebook and Amazon, and figure out, are these laws fit for purpose?

One area that we’re going to have to keep monitoring very closely, where we also have cases in flux, is this issue of algorithmic collusion and what happens when these algorithms are effectively facilitating price fixing.

We’ve seen really troubling allegations against this company, RealPage. We’ve seen similar lawsuits in the context of hotels, where, basically, the defense is arguing that there isn’t really collusion happening because the algorithm, for example, is just recommending that these hotels or landlords use those prices. That, for example, is an area where I think Congress would need to weigh in.

Luigi: We have very sophisticated listeners, but I wonder how many of our listeners actually know what the Robinson-Patman Act is. In fact, I recommend that our listeners send an email, for those who really knew about it before this podcast, and we’re going to draw some T-shirts as a present. Can you explain to our listeners what the Robinson-Patman Act is and why it is important to enforce it today?

Lina Khan: At its core, it prevents large retailers from securing special terms that are not being made available to other players. If major retailers are, for example, asking for quantity discounts or volume discounts because of the efficiencies and the cost differentials that are resulting from that, that is fair game.

What they’re not able to do is just use their raw muscle and bargaining power to say, I want you to give me a better deal than that smaller store down the road. This was a law that has stopped being enforced, and I would routinely hear from independent grocers and wholesalers that the terms that they were being offered by big suppliers were actually higher prices than what is on the shelves at the big-box stores at the retail level, which is just shocking, and especially for rural areas, the lack of enforcement of Robinson-Patman has been pretty devastating.

There’s research and reporting actually drawing a line between the drop in Robinson-Patman enforcement and the rise of food deserts. It was a top priority to reinvigorate this area of law. We brought two lawsuits, one against Southern Glazer’s and the other against Pepsi. Both of them are pursuing, and the agency just defeated Southern Glazer’s efforts to dismiss the lawsuit.

Bethany: The Wall Street Journal published over 80 editorials criticizing your approach. People called for your firing, from Reid Hoffman to Elon Musk to Barry Diller. Were you surprised by the extent of the pushback, and did it affect you at all?

Lina Khan: I wasn’t too surprised. What was striking was just seeing that for a certain class of company or business executive, there was this basic level of feeling offended that the law was being applied to them and that they had to follow the rules.

It is true that at an agency like the FTC, it is very easy to say, OK, I’m going to focus on the fraudsters and the scammers and these fly-by-night guys who are doing a lot of harm and look the other way when it comes to the big guys.

One thing that I wanted to avoid was these two tiers of justice, where we bring down the hammers on the small businesses but go pretty light on the big businesses. That kind of even-handed approach to enforcing the law is really critical because not doing that contributes to real cynicism and disillusionment with government to think that there are special access and special favors and sweetheart deals that are available to some and not others.

Luigi: In the past, FTC chairs, after they step down, go and make millions at private law firms. I have two questions for you. First of all, did you receive very generous offers, and number two, are you taking them or not, and why?

Lina Khan: I did receive some solicitation from law firms, which was interesting. I have not pursued them. I’m back in academia, and I’m really focusing on mapping out the next phase of this movement and work through scholarship and research, but also through making sure that we’re training and providing support to the next generation of talent.

Luigi: Jonathan Kanter has harshly criticized the conflict of interest between many academic economists that, on the one hand, opine as academic economists, and on the other hand, are hugely paid as experts in many antitrust cases or are even on retainer by many of the big tech firms. Do you agree with him on this front? You’ve been silent on this issue.

Lina Khan: The issue of academics simultaneously serving as consultants and not openly disclosing that is a major problem. It’s also a bigger problem at the level of knowledge production and research.

If you have the vast majority of, say, antitrust legal scholars that are also being hired by the monopolists to opine and to direct their research in certain ways, I think it can entirely change the trajectory of what information and research is even being produced, in the first instance, and really deprive the public of all of the benefits that are supposed to come from academics and scholars that are pursuing those lines of inquiry in a way that isn’t conflicted or corrupted by some of those other forces. I think this is absolutely a big area where we need some serious reforms and guardrails.

Bethany: Are you surprised that she has gotten as much fire as she has?

Luigi: Not only am I not surprised, I’m actually glad. I don’t know if I ever revealed to you that I have this theory of regulation that goes back to my mother. This is a bit of a long story, but my mother really liked to disinfect us as a kid with alcohol, even when Citrace was a much better disinfectant. I didn’t understand why she was doing that, but then I understood that the reason was because when she was disinfecting us with alcohol, we were screaming, and so she knew that was effective.

You don’t know when the Citrace is working, but you do know when the alcohol is working. My theory is that when regulators are doing their job, you must hear some screams from the industry because if they don’t scream, it’s basically not effective.

Bethany: Is there an overall consensus on antitrust law and what it should be? I would think that it has moved a fair amount during her tenure as the FTC head, but is there a sense that her views are out there, or is there a sense that her views are now in the middle? She’s obviously a young wunderkind, but where do her views fit in the overall atmosphere of antitrust today?

Luigi: I will distinguish very much between her views before she became the chair of the FTC and what she did at the FTC. What she did at the FTC is basically tough enforcement of antitrust according to a more consensus view.

Even if you take the narrow view, a consumer-welfare standard, it’s not just prices. You can easily introduce quality as a factor, and it’s not really a change in regime to what came before. It’s a change of regime because it’s actually enforced.

Now, she’s also tried to extend and be more creative with new notions of market dominance—for example, this case that if you buy a competitor, you are reducing the potential threat of entry, and so, you are reducing competition. In the case of Meta and Within, she didn’t win that case, but she did win in the sense that the judge was open to entertaining this theory, which is a new theory.

Then the merger guidelines had been a lot of work. The jury is still out on how they work and don’t work. I thought that they were not as radical as they could be, but many people think there was a shift in the consensus of antitrust. The fact that the new administration said they will not revise the merger guidelines suggests that this stuff is going to stay for a while.

I think she’s much less Brandeisian than people give her credit or blame for. Paradoxically, the label Brandeisian has been used by her opponents to try to put her in a corner and act like she doesn’t fit. This is why I hate the term “hipster antitrust,” because I think it is a patronizing, condescending term that doesn’t really engage with the argument, but makes fun and puts you down.

Bethany: You mentioned that you were sympathetic to her arguments in the Meta case. Why are you sympathetic to her arguments? As a follow-up, when she is criticized for pushing the boundaries of antitrust law because she did lose some cases, is that a good or a bad thing? If people are never losing cases, doesn’t it mean that they’re not trying hard enough? I could make an argument that if they’re only bringing cases that absolutely, positively, should be brought under existing law, then they should win every case. But isn’t that an odd standard to hold somebody to?

Luigi: Economists say that if you never miss a flight, you waited too long at the airport, and I certainly miss my share of flights. For what is called in jargon the first-order condition, I’m optimizing. If you’re optimizing, you should be losing some cases. I have some colleagues that never had a paper rejected. Having had a lot of papers rejected, I can tell you that they are too conservative.

The statute of antitrust is sufficiently vague. It is not like criminal law that should be very precise. I’m not an expert, but there should be a very precise line what is criminal and not what is criminal.

When it comes to statutes that are economic in nature, where the economic problem is changing over time, you need to try cases to see how some arguments adapt to, for example, new technologies. If you don’t even try the cases, you don’t even see the possibility. That’s one argument.

The second, which is more cynical, is that a lot of the stuff is revealed with discovery. You can argue how much you want about the most sophisticated models, but if you have an email from a CEO saying, we are buying this company to kill it because otherwise we are going to lose in the marketplace, that’s pretty indicative that this is an anticompetitive action. I think CEOs have not learned enough that they shouldn’t write anything in an email because everything is discoverable. To be honest, I think that Google learned it; Meta did not, clearly.

Bethany: How far do you think she got? How much change do you think she succeeded in enacting? You did talk about the merger guidelines. Are there other things you’d point to?

Luigi: We didn’t have time, but we didn’t discuss all the parts of consumer protection. Remember, the FTC is not only about antitrust. It’s about consumer protection, and she enacted a number of rules. One is actually taking effect pretty soon, which is about the ease of unsubscribing to those legacy subscriptions, that you should make it as easy to unsubscribe to anything as to subscribe. That should be a rule of the game.

It’s not even sufficiently aggressive, by my standard, because I think that those recurring charges are a nightmare. Now, if you want to read an article, you have to subscribe one month for free, but then for all your lifetime, and I’m too busy to remember, I end up spending a fortune on this stuff, and it’s pure extortion, in my view. I would like to have a much more aggressive—

Bethany: Paying journalists is not extortion. I’m sorry. You can come up with—

Luigi: No, no, no, this not journalism. This is every possible subscription on the face of the earth.

Bethany: You can come up with another example besides articles you want to read, for which possibly you should be paying, but unfortunately, we as journalists have trained people that they shouldn’t have to pay to read things. That’s an unfortunate byproduct.

Luigi: No, no, I’m happy to pay per article. What I don’t like is that they basically structurally prey on the fact that we forget, and so they ask you to put in your credit card, and then you’re there forever. And now, the big advantage when they steal your credit card is that you stop everything, and so you also automatically stop those recurring transactions.

Bethany: I know, it’s completely fair, but still, I don’t like to think of my profession as structurally preying on people.

Luigi: It’s only private equity that is preying, not the journalists.

Bethany: Precisely. So, when you look back at her tenure, do you view it as a successful one? How do you think about it?

Luigi: Honestly, I felt at the beginning, she was parachuted into enemy territory without any support, almost as a dispensable loss. I felt both she and Jonathan Kanter were put in that position because they were isolated from the rest of the Biden administration. Lina was incredibly young and objectively inexperienced and running an organization that had been, for many, many years, converted to a new way of thinking.

I’m sorry to report, being young and being a woman doesn’t help in making your case. It was making it really difficult. The reason why we observed so many leaks . . . This is another thing that most people don’t understand. The amount of leaks from an administration has nothing to do with the competence of the administration. It has to do with how many disloyal people there are in the administration.

The first Trump administration had a lot of leaks. This one has basically none. Why? It’s not that this one is much better than the previous one. It’s simply that they only recruited super, super loyal people. Nobody talks about it because the journalists, to talk about the leaks, have to have somebody leaking. If nobody leaks, there is no story. There were a lot of leaks at the beginning, and she was accused of every possible turpitude.

What I thought was interesting was comparing the way the world reacted to her and the way the world reacted to Jonathan Kanter. They share the same philosophy. They basically did the same actions, but Jonathan Kanter is looked at with much more respect than her.

I don’t know whether it’s because she’s a woman. I don’t know whether it’s because Jonathan Kanter had a career in the law before, and so he was more reputable. I don’t know what it is, but certainly his life at the DOJ was much, much easier than her life at the FTC.

Bethany: I was thinking about this through the lens of the complaints from businesspeople about how chilling having an active FTC was for the business community, but antitrust should be a consideration of a merger. I liked her comment that it was last on the list of what anybody would think about when they were planning a merger, and it should be on the top of the list, or at least near the top of the list. I think it’s fascinating that just having to think about it is referred to as chilling.

Luigi: Yes, she was clearly a change of regime. In particular, she was hated in Silicon Valley because venture capitalists and your friends, the private-equity guys, need an exit. In recent years, the best way to exit was to sell to a competitor. The reduction of that possibility was really hurting the business of many investors, but it was hurting them for the right reason. If you are blocking mergers because they have potential market-power considerations, I think it must be that it is bad for consumers.

Bethany: Do you have any sense, or is there a sense out there after the Stigler Center conference on antitrust, of what the new landscape is likely to be? What of her tenure will be permanent, and what could just evaporate, or is everybody just in a state of wait and see, as with so very much?

Luigi: There is a clear sense that the new administration wants to continue with some of the rhetoric. At the Stigler Center, we had as a keynote speaker, Andrew Ferguson, who is the new Lina Khan. He was particularly aggressive against social-media companies.

He had a line that really made a mark on me. He said, whenever there are few people in an industry, there is smoke. Whenever there is smoke, we need to take a look, which was very, very different than the previous attitude that we don’t do anything unless there is overwhelming evidence of collusion.

Maybe it’s because I’m Italian, but if there are only three competitors, and they are all located in the same town, the chances of collusion are pretty large. In fact, I don’t need to be Italian because Adam Smith was saying the same stuff. The small number facilitates collusion. I think it’s good if the FTC and the DOJ look into that to make sure that that collusion doesn’t take place.

Now, I don’t know whether she inspired this, but there is a chunk of the new right that is against big business, and Steve Bannon is actually a leader in that, and they like what she did against big tech. One member of this group, Sohrab Ahmari, who we had on the podcast, had a very clever line that “I am a Khan-servative.” That suggests how popular she also is on the right spectrum.

Bethany: It actually is fascinating, when you think about it through the lens of what’s happening now, which is how incredibly optimistic big businesses in Silicon Valley were that the days of Lina Khan were done, that it was all over. Actually, if you had not even necessarily read the tea leaves, but if you had just looked at the past and looked at a bunch of these comments and listened to JD Vance’s support for her, you might not have been so optimistic that her time had come and gone. It’s interesting looking back at that. I’m not saying that I would have gotten it, either, but it’s fascinating how overly optimistic the business world was that everything was going to go their way under Trump.

Luigi: I think that Mark Zuckerberg was not overly optimistic. He saw the writing on the wall, and that’s the reason why he went to pay homage, because he was afraid we might not see the end of the case against Meta. My impression is it might be that Meta is the right sacrificial lamb. Every period has a sacrificial lamb. Standard Oil was a sacrificial lamb in the early antitrust movement, then the desire to do anything else vanished. After Microsoft, after that case, basically, nothing got done. There is a serious risk that you do something with Meta, and then everything goes back to normal.

Bethany: After it’s too late.

Luigi: There is, however, a potential negative side. One of the reasons why the consumer-welfare standard became, at some point, the Bible of antitrust and why the so-called Chicago theory of antitrust became dominant was to minimize the risk of actions that are driven just by political vendetta.

Nixon famously had an order to pursue an antitrust case against one of his political enemies. The more you make antitrust rigid and follow some procedure, the more difficult it is to use arbitrarily.

Now, the Brandeisian approach has made the criteria to apply antitrust a little bit more vague. My fear is, given where this administration is going, this might create an opening for this administration to use antitrust in a really political way, in a political vendetta.

The cynical part of me that, as you know, is unfortunately the bigger part, says that the reason why Trump embraced a more Brandeisian approach to antitrust is because that gave him more discretionary power, which is what he cares about. I think that that would be a very bad outcome of all this movement.