Lina Khan is the face of the populist antitrust moment. But how much power does the FTC chair wield?

Her appointment as chair of the agency tasked with the enforcement of antitrust law and consumer protection comes at a critical time for large tech companies in the U.S., as both Republicans and Democrats have soured on Silicon Valley titans like Apple, Amazon, Google, and Facebook (known collectively as the Big Four)—all large enough to dominate their respective markets and quickly gobble up smaller competitors. Khan will act as the de facto face of a coordinated attack by the White House and Congress on corporate giants, reversing the past 40 years of FTC ideology. But after the FTC’s recent court loss to Facebook and Amazon’s recent argument that Khan has a conflict of interest with the company, some are questioning just how much change Khan will be able to effect.

Khan’s road to the FTC

At the age of just 32, Khan has forged a strong reputation in the antitrust community as a fierce critic of Big Tech’s increasing market dominance, and as a defender of America’s anti-monopoly laws. She represents the next wave of public servants, a generation that came of age in the post-9/11 recession and graduated from college into the Great Recession, millennials who watched the growing political influence of corporate America coincide with growing income inequality. 

Khan was born in London to Pakistani parents and immigrated to the United States when she was 11. She quickly discovered an affinity for journalism and calling out corporate malarkey: As a high school student, she got a nod in the New York Times after writing for her school newspaper about a Starbucks policy that prohibited students from sitting in the coffeehouse. She served as editor of her student newspaper at Williams before joining the New America Foundation, where she began her career in antitrust research.

In a piece for Time magazine in 2013, Khan described a breakthrough moment she had while grocery shopping, one that would guide the rest of her career. While looking for Halloween candy, she wrote, “I counted over 40 different brands of candy, but it turns out almost all of them are produced by one of three companies: Hershey, Mars, and Nestlé.” The bulk of the then $2 billion Halloween candy market, she wrote, would be distributed among the major players and no one else. “If we want a healthier, more diverse market—and more variety in our Halloween buckets—we could start by reviving some of our antitrust laws,” she concluded. 

But Kahn really made waves as a 28-year-old law school student at Yale University in 2017, when she wrote a groundbreaking 98-page article about Amazon’s anticompetitive behavior for the Yale Law Journal. The paper was picked up and read widely, her first major brush with fame.

The long legacy of antitrust law

To understand just how revolutionary Kahn is for the FTC, you’d have to go back to Ronald Reagan. In 1981, he took his presidential win as a mandate to reshape the U.S. economy as one that trickles down from the top. To do that, he relied heavily on the FTC. The goal of the agency, he decided, was to keep prices low for consumers. The authority of the agency was largely curtailed, and antitrust cases were brought with one guiding principle: Is the company engaging in predatory pricing?

That basic principle drove the work of the FTC across the next five presidencies, with minimal changes, regardless of political affiliation. Barack Obama campaigned in 2008 on a promise to use the FTC to protect consumers from increases in pricing experienced under the Bush administration. 

Under this guiding concept, many mergers and acquisitions were largely left unexamined by the FTC, and deals skyrocketed. Global M&A hit $1.3 trillion in the first quarter of 2021, the second-largest quarter ever. That’s a 94% jump from last year. The economic repercussions of COVID-19 aided in shrinking competition. More than 400,000 small businesses closed during the pandemic. 

Meanwhile, income inequality in the United States has reached its highest level in 50 years. On average, about 30% of a company’s workforce is laid off after a merger or acquisition in the same industry; employees lose about a third of annual wage growth; and although companies often claim that prices will go down after they merge, they tend to increase. 

To Khan, all of this is related. “There is sound reason to believe that pervasive market power in the economy has contributed to the high level of economic inequality in the United States today,” she wrote in a 2016 paper.

Khan argued that when companies like Amazon have control of the marketplace and make products, they can undercut competitors while keeping prices very low. Amazon cross-subsidizes itself, and often forgoes making a profit on products so long as it helps with market dominance. 

“My argument is that gauging real competition in the 21st-century marketplace—especially in the case of online platforms—requires analyzing the underlying structure and dynamics of markets,” Khan wrote in her Amazon essay. “Rather than pegging competition to a narrow set of outcomes, this approach would examine the competitive process itself.” 

Amazon has access to consumer data, it has advantages in shipping and warehouse infrastructure, and it is willing to forgo profits to remain dominant, said Khan. 

One of the most prominent successful antitrust cases, probably the most famous recent case study, was the breakup of AT&T and Bell in the 1980s. The group had cornered the telecom market, and upon breaking into seven companies known as “baby Bells,” prices for local and long distance calls dropped significantly (though most of those baby Bells have come back together under AT&T in recent years). 

But, Khan argued, the big tech monopolies of today are an entirely different beast, more similar to the railroad barons of the late 1800s that led to the pivotal Interstate Commerce Act of 1887. 

“The thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor,” wrote Khan. 

Pegging antitrust to consumer welfare, she said, doesn’t fully capture the way market power works in the current economy. Price and output are no longer fair measurements of competition. Instead, she said, antitrust principles should focus on policing “forms of vertical integration that firms can use for anticompetitive ends.” Simply put: Conflicts of interest must be limited.  

A movement against Big Tech

A legal analysis of antitrust law is fairly far down on the list of things that go viral, but Khan’s well-researched and plainly written Amazon takedown defied the odds. It was read hundreds of thousands of times, regurgitated by major news outlets, and critiqued by legal scholars around the country. 

The moment would set her on a beeline from the gothic halls of New Haven to the neoclassical fortresses of Washington, D.C. 

After Yale Law, she returned to the Open Markets Institute, before becoming a professor at Columbia Law School (she also moonlighted as a fellow at the FTC and as legal counsel for the House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law). 

Legislators in Congress held a number of hearings with social media executives, during which they cited Khan’s work. By 2020, both the left and the right were actively grilling Amazon CEO Jeff Bezos as well as the CEOs of Apple, Google, and Facebook about their anticompetitive behavior. Khan served as a key staffer and adviser on the hearings. 

In an April hearing, Khan told the Senate that she would continue her work to further regulate Big Tech at the FTC, citing a “whole range of potential risks” in the industry. “One that comes up across the board is that the ability to dominate one market gives companies, in some instances, the ability to expand into adjacent markets,” she said.  

The end of the all-encompassing corporation has become a rallying cry for the Biden administration. This week, the White House began crafting an executive order that calls on the Justice Department and FTC to update their criteria for examining proposed corporate mergers. 

Last week, the House Judiciary Committee approved a six-part package, the Ending Platform Monopolies Act, based on the outcome of hearings where Khan served as legal counsel. The package specifically targets the Big Four, gearing up for what will likely be a long and expensive showdown between companies with hoards of influence and lobbyists in D.C. 

But the question of whether Khan will be able to rouse an agency that’s been in a state of semiconsciousness for nearly half a century remains. 

Detractors argue that Khan is little more than a figurehead, meant to placate progressives and antitrust populists while the FTC remains largely ineffective. This week, a federal judge struck down an FTC complaint against Facebook, brought by Khan’s predecessor, that would have forced the company to divest from Instagram and WhatsApp. Khan and the FTC now have until July 29 to file a new complaint.

Amazon also tried to make the case on Wednesday that Khan should recuse herself from any FTC enforcement decisions involving the company—including the FTC review of its $8.45 billion acquisition of movie studio MGM—because of her previous statements that the company should be broken up.

There’s a dichotomy between popular groupthink around monopolies and what’s actually going on in the courts, said Aurelien Portuese, director of antitrust and innovation policy at the Information Technology and Innovation Foundation, a D.C. think tank that is partially funded by Big Tech. “There are a lot of proposals to depart from these principles of how you define the market and market demand. I think these attempts may very well be crushed many times in courts,” he said. Khan might be effective in precautionary rulemaking, he said, but that would largely impact smaller tech upstarts, not the Big Four. 

Those interruptions, he argued, would stifle innovation and American entrepreneurship, giving China an upper hand (a similar argument was made when Microsoft faced antitrust charges in 1998).  

Populist antitrust sentiment, said Portuese, is a trend that will soon fade: “I don’t see radical changes in the long run, because of the inevitable judicial review that entrepreneurs are subject to.”

Even so, progressive Democrats remain hopeful Khan can shake things up. 

“Giant tech companies like Google, Apple, Facebook, and Amazon deserve the growing scrutiny they are facing, and consolidation is choking off competition across American industries,” said Sen. Elizabeth Warren (D-Mass.). 

“With chair Khan at the helm, we have a huge opportunity to make big, structural change by reviving antitrust enforcement and fighting monopolies that threaten our economy, our society, and our democracy.” 

More must-read tech coverage from Fortune:

• A Tesla “recall” applies to nearly every car the company has sold in China
• Post-Brexit data transfers from the EU to the U.K. are safe—for now
• Semiconductors are in short supply. 3 experts weigh in on what to do about it
• Southeast Asia’s most valuable company has an edge in the battle of the super-apps: Its gaming business
• 11 smart, time-efficient podcast tips and tricks