Public & Academic/Policy & Regulation/Opinion/ What Europe can learn from the new US antitrust chief, Lina Khan The rise of Big Tech critic Lina Khan has been meteoric. Everyone — including in Europe and especially in tech — should pay attention. Credit: Caleb Fisher on Unsplash Credit: Caleb Fisher on Unsplash \Public & Academic UK Spring budget: R&D cuts but huge quantum spend By Amy O'Brien 15 March 2023 Public & Academic/Policy & Regulation/Opinion/ What Europe can learn from the new US antitrust chief, Lina Khan The rise of Big Tech critic Lina Khan has been meteoric. Everyone — including in Europe and especially in tech — should pay attention. By Nicolas Colin Wednesday 23 June 2021 Nicolas Colin is cofounder of VC firm The Family. He writes a regular column for Sifted By Nicolas Colin Wednesday 23 June 2021 Nicolas Colin is cofounder of VC firm The Family. He writes a regular column for Sifted 32 year old Lina Khan has recently emerged as the main figure of the ongoing American antitrust revival. Not only was she confirmed as a member of the Federal Trade Commission (FTC) by a strong bipartisan majority, Joe Biden then also announced that she will become the organisation’s chair — virtually ensuring that her sharp and transformative ideas are about to turn into determined action. After a few years of pondering and hesitation, it seems the US is now ready to take the lead in reining in big tech companies such as Apple, Google, Facebook, and Amazon. Khan is far from being an insider in antitrust scholarship, a world still dominated by senior white males with long careers in law or economics. She is, in many respects, the opposite: a young American woman born in London to Pakistani parents, who became famous overnight in 2017 with the publication of her landmark article Amazon’s Antitrust Paradox in the Yale Law Journal. That one event set her on a relatively direct path to her appointment as FTC chair. The fact that she’s risen so high at such an early age only confirms the potency of her thinking, and everyone — including in Europe and especially in tech — should pay attention. Khan now has potentially several decades ahead of her to advance and refine her ideas at the forefront of what already appears to be an intellectual, legal and political revolution. But what is this revolution all about? The evolution of antitrust policy These days, many people on both sides of the Atlantic see antitrust as a powerful lever that policymakers can pull to defend the interests of all of us — the consumers — against the big, greedy, predatory companies that want to sell us poor quality, hazardous products at a ridiculously high price. But antitrust has not always been so focused on consumer welfare. Rather, in the first half of the 20th century, prominent figures such as US Supreme Court Justice Louis Brandeis thought that regulators needed to tame bigger businesses so as to preserve the interests of the smaller ones. For the first generation of antitrust thought leaders, small was beautiful; regulators needed to make sure that the likes of Rockefeller’s Standard Oil wouldn’t crush their suppliers and resellers thanks to their irresistible market power. The refocusing of antitrust on the consumer’s interests only happened after World War II. The American left, led by personalities such as consumer advocate Ralph Nader, thought that it was essential to empower individuals against the business world. Meanwhile, inspired by a new generation of neoclassical economists, the right was all too happy to get rid of this ‘save the SMEs’ nonsense: let the market decide, and if only big corporations can make a living serving happy consumers, then so be it! As for Europe, it caught up a bit later, in the 1980s, and embraced the consumer welfare framework as part of building the European single market and ensuring fair and equal conditions for competing businesses. The problem with the post-WWII consensus is that it appears to be irrelevant in today’s economy. The economic nature of competition between tech companies seems to guarantee that consumers have access to ever-cheaper products, delivered to them at an ever-faster pace. In many ways, and especially when viewed from the consumer perspective, the whole game looks like a win-win: Jeff Bezos secures infinite wealth building Amazon, and at the same time the customers he’s been permanently obsessed with get a bargain and ever more convenience. What’s not to like? This is the point when Lina Khan enters the stage. In her 2017 article, she outlined that the downside of Amazon’s impressive success was found not on the consumer side, but rather in the very real problems of Amazon suppliers and sellers on its marketplace. These players are confronted with the daily challenge of trimming their margins, buying advertising from Amazon itself, competing with Amazon’s own private-label products and even generating fake reviews if they want to have a chance to sell anything to Amazon’s happy customers. It’s almost as if Khan is bringing us back to the dawn of antitrust scholarship, when the consumer was an afterthought and regulators preferred to focus on the balance of power between big corporations and a multitude of SMEs. Today’s consumers — armed as they are with an abundance of information and choices — don’t need much help from regulators, thank you very much. SMEs, on the other hand, are struggling in an economy that seems to reward only the biggest fish in the pond. What does Khan mean for Europe? But will this ‘neo-Brandeisian’ revolution cross the Atlantic? If yes, will it change the course of the European tech scene? It’s a bit early to tell, but two ideas are worth noting. The first is that Europe has an issue with scale. Hence, anything that curbs the scale of existing giants can only represent opportunities for a market like ours, which seems to specialise in giving birth to midsize players rather than juggernauts such as Amazon. It’s probably no coincidence that the rise of Lina Khan is happening at the same time as the fragmentation of the global tech world, and the proliferation of successful local tech champions across the globe. The other idea is less encouraging for Europe. For years, the Old Continent’s leaders have claimed that regulation was Europe’s strength and that we Europeans would impose a new approach to taming those evil (US) tech giants. Well, now it turns out the Americans are beating us to that, too! In retrospect, a figure such as Lina Khan could only emerge from the vibrant US legal scene, and only the violent convulsions of the US political system in recent years could trigger her rise and provide such a clear mandate for radical action. The lesson here is that innovation on the regulatory side can only be as strong as innovation on the business side — and America is beating Europe on both fronts. Therefore we Europeans are back to square one: let’s focus on building successful tech companies, taking whatever advantage we can in the more favourable context laid out by Lina Khan. Only after that will we be able to claim our seat at the front of the regulatory revolution that’s currently taking off in Washington DC. Nicolas Colin is cofounder of VC firm The Family. He writes a regular column for Sifted. 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