Lina Khan on a Second FTC Term, AI, Price Gouging, Data Privacy

A few days after Joe Biden dropped out of the presidential race in July, Reid Hoffman appeared on CNN and voiced his support for Kamala Harris, with an asterisk. Hoffman, a Democratic megadonor and venture capitalist best known for co-founding LinkedIn, made his case for Harris as the candidate of business. He said that as a former senator from California, she understood the value of his industry. He said that in contrast to Donald Trump, she represented stability, unity, the rule of law. But there was at least one person he hoped she wouldn’t keep around: Lina Khan, the chair of the Federal Trade Commission. Khan, he said, was overstepping her bounds, “waging war” on business and “not helping America.”

Soon after, media mogul Barry Diller, chairman of IAC Inc., echoed the call for Khan’s ouster, telling CNBC she was a “dope.” He and Hoffman joined the bipartisan club of tech figures who’ve singled her out for criticism, including venture capitalists Vinod Khosla, Chamath Palihapitiya, Joe Lonsdale and Peter Thiel. What neither Hoffman nor Diller mentioned was that their interest wasn’t exactly dispassionate. At the time both billionaires called for Khan’s firing, she was investigating their businesses.

In August the FTC announced an $8.5 million settlement with an IAC subsidiary it accused of deceiving workers. The company didn’t admit wrongdoing. Diller retracted his use of the word “dope” but not his call for Khan’s removal. He declined to comment for this story.

Hoffman, who’s on the board of Microsoft Corp. and was an early investor in OpenAI Inc. and board member until last year, is a party to five different FTC inquiries. The agency is investigating whether Microsoft’s $13 billion-plus investment in OpenAI violated antitrust law; whether OpenAI violated consumer protections; and whether a $650 million deal between Microsoft and Inflection AI, another company Hoffman co-founded, was structured to avoid FTC scrutiny. According to a person familiar with the agency’s investigations, who spoke on the condition of anonymity because the inquiries haven’t been made public, the agency asked Inflection to turn over emails and texts from Hoffman and other senior leaders. The agency is also looking into whether Hoffman violated antitrust laws by sitting on both companies’ boards and, separately, has asked LinkedIn to preserve documents related to its use of customer data in its AI tools. Microsoft didn’t comment for this story but has said the Inflection deal wasn’t anticompetitive. Hoffman declined to comment but has defended the Inflection deal as “100% legal,” adding that he “wasn’t in the room” for the negotiation.

During a morning sit-down in her Washington office in September, Khan says she’s gotten used to flak. “It’s no surprise to me personally that monopolists, and executives associated with monopolies, would prefer that the anti-monopoly cops just go away,” she says, flashing a smile before snapping back into cop mode. “But that’s not the job that we’ve been given.”

For decades, the FTC was as anonymous as any Washington regulator. Although its 1,200 staff have a broad mandate to protect Americans from unfair or deceptive corporate behavior, including illegal monopolies, the agency is almost comically outgunned. It often faces off in court against companies that field as many law firms as it fields lawyers. During Bloomberg Businessweek’s visits to FTC headquarters, signs by the water fountains warned not to drink the water. Agency leaders from both parties have tended to act as if the best way to regulate the big dogs was to stay out of the way.

Not Khan. Her FTC overhauled its criteria for judging mergers and acquisitions and challenged a bunch of big ones. Nvidia, Sanofi, HCA Healthcare, Illumina and Lockheed Martin abandoned planned mergers after the FTC sued, and Kroger Co. might be next. The FTC is also suing Amazon.com Inc. and Facebook parent Meta Platforms Inc. for alleged anticompetitive practices. It helped push Big Pharma to dramatically cut prices for inhalers. It secured one settlement banning Rite Aid Corp. from using facial recognition tech to blacklist shoppers and another refunding hundreds of millions of dollars that Epic Games Inc. allegedly tricked Fortnite players into spending on in-game purchases. (Neither company admitted wrongdoing.) It’s proposed rules to ban so-called junk fees and to restrict the use of kids’ data, and it’s facing off with conservative judges as it tries to abolish noncompete clauses.

“The only winners if this merger is blocked will be larger, non-unionized retailers,” Kroger said in a statement. Amazon and Meta, which have denied wrongdoing, declined to comment for this story, as did Epic and Nvidia. The other companies didn’t respond to requests for comment.

Taken as a whole, the agency’s work has made Khan the face of a fresh backlash against concentrated corporate power. In her own telling, her tenure has been about returning the FTC to its original mission of protecting people from predators. “You’re always having to look around the corner to figure out, are you about to get screwed or taken advantage of or ripped off?” And many scams, she says, are hidden costs of laissez-faire oversight. “These things are not some type of inevitability,” she says.

Khan is among a handful of Biden appointees who’ve taken a firm hand with business. US Department of Justice antitrust chief Jonathan Kanter won a federal trial ruling Google a monopoly and is suing Apple Inc. SEC Chair Gary Gensler has been pushing back on the crypto industry. It’s Khan, though, who’s been the tallest lightning rod for America’s loudest rich dudes. Demographics may have something to do with it. It’s Khan who’s the woman of color, who’s Muslim, who’s 35 years old, who finished law school when Trump was president. As new as she is to Washington, she’s not focused on ingratiating herself with the old boys’ club. “A lot of people in the back of their heads are thinking, ‘Yes, I’m going to be tough. Yes, I’m going to be aggressive. But I do care if, when I’m out of this job, Fortune 100 companies are going to hire me,’ ” says fellow FTC Commissioner Alvaro Bedoya. “I don’t think Lina cares what they think about her in Davos or Aspen. That thought does not cross her mind.”

Khan’s willingness to take big swings has made her a policy wonk with a measure of celebrity. Her public appearances draw crowds of starstruck law students as well as people with more direct stakes in her decisions. “If you’re in government, and you’re making a lot of big corporations mad, you’re probably doing a pretty darn good job,” says Lynne Fruth, who runs a regional pharmacy chain based in West Virginia. Fruth has told the FTC she’s getting squeezed by take-it-or-leave-it contracts from pharmaceutical middlemen, several of which the agency sued in September.

The FTC’s work has become a talking point for several Democrats running in swing states this fall, part of a larger shift in the way US politicians relate to big companies at a time when voters of both parties are pushing candidates to embrace populism. Trump would likely replace Khan, but it isn’t clear how much of her work he’d undo. His running mate, JD Vance, has called her “one of the few people in the Biden administration that I actually think is doing a pretty good job.” Other “New Right” figures (think Trumpism without Trump) have been similarly complimentary, notably Josh Hawley and Matt Gaetz.

Khan says she’s a “close student” of what her Reagan-era counterparts did to reorient the agency and that she admires their effectiveness even if she hates the results. Like the Reaganites, Khan’s work could reshape our laws and realign our politics for decades to come, especially if she gets to keep doing it. Harris has avoided weighing in for or against Khan, but she’s proposed expanding the FTC’s authority to include “price gouging” on food. Khan seems ready to take her up on that idea—and to serve another term. “It certainly feels like, in some ways, there’s a lot more work to do,” she says.

Khan often speaks in paragraphs rather than sentences, but buried in those paragraphs is a wry sense of humor. What led to the backlash against corporate concentration? “You know, I think there are a lot of factors,” she begins. Among them: “Reality.”

She cites a stream of headlines that, she says, illustrate the dangers of consolidation, from shortages of baby formula to the CrowdStrike software outage. To add a few more examples: Extreme delays at airports dominated by a single airline. Data breaches at social media sites with billions of users. Awful conditions at nursing homes rolled up by private equity firms. And so on. “We’ve been living in this 40-year natural experiment, and now the results of it are very vividly all around us,” Khan says.

Her office, too, is a minor museum on the subject. Here, Ida Tarbell’s history of Standard Oil; there, a board game called Anti-Monopoly, the subject of a lengthy battle over intellectual property. Seated near copies of Antitrust (by Democratic Senator Amy Klobuchar) and It’s OK to Be Angry About Capitalism (by Senator Bernie Sanders), plus a stuffed elephant knitted by European antitrust chief Margrethe Vestager, Khan says she started seeing monopolies everywhere about a decade ago, in the pages of the Wall Street Journal. “There would be all these stories that actually would be, in some way, a monopoly story, but they were not being reported as a monopoly story.”

At the time, Khan, the daughter of a corporate consultant and a health-care business adviser, had recently graduated from Williams College with a political science degree. (She’d grown up in London and the New York suburbs; her parents, British citizens of Pakistani origin, moved to the US when she was 11.) She was working at the think tank New America, researching and reporting on corporate concentration. She analyzed subjects as diverse as commodity pricing and declining entrepreneurship. Interviewing Alabama chicken farmers, she says, she saw how scared they were to criticize the companies that bought their birds. “This kind of fear runs rampant across the American economy,” she said in a speech this spring. “Fear stifles free speech and undermines economic liberty.”

Khan left for Yale Law School, where she wrote a law review article that went megaviral. “Amazon’s Antitrust Paradox,” published in 2017, argued that regulators’ narrow focus on Amazon’s low prices had blinded them to the ways it systematically obliterated its competition. The article helped popularize a new way of thinking about antitrust law and made Khan, if not famous, at least antitrust famous. She was on her way back to New America when the think tank terminated the team she was to rejoin.

Her boss there, Barry Lynn, said it was because he’d written a statement celebrating a European antitrust crackdown against Google’s parent, Alphabet Inc., which was a key donor along with its then-chairman, Eric Schmidt. New America, which declined to comment, has said Google didn’t push for the ouster because of Lynn’s statement, but Khan frames it as a purge. “It was a pretty vivid illustration of how concentrated economic power can be wielded to try to suppress ideas,” she says. (Schmidt declined to comment; Google didn’t respond to inquiries.) She followed Lynn to the independent shingle he set up, the Open Markets Institute, then went to work at the FTC under Rohit Chopra, Biden’s future director of the Consumer Financial Protection Bureau. After that, a House subcommittee on antitrust, where Khan helped write a report that accused the biggest tech companies of harming consumers and holding back innovation.

The big leap came in June 2021. In a hearing just hours after the Senate confirmed Khan as one of the FTC’s five commissioners, Klobuchar blurted out that Biden was going to make her its chair, the youngest in history. The move, privately pushed by allies including Senator Elizabeth Warren, was surprising enough that some Amazon officials assumed it was a joke, according to people familiar with the incident who weren’t authorized to discuss internal communications. Warren declined to discuss private talks but says she’s a big Khan fan. “Lina actually enforces the law as it’s written,” she says. “It’s been a long time since we’ve seen that from the FTC.”

Before Khan, the FTC was better known for playing whack-a-mole with fraudsters than for taking big swings. “We were a very hardworking agency that did nothing,” says Columbia University law professor Tim Wu, who worked there in 2012 and later became Biden’s competition adviser. Since at least the 1980s, commissioners have tried to “nip and tuck” the economy while leaving the foundations undisturbed, says Cornell University law professor K. Sabeel Rahman, who served as Biden’s regulation review chief. Khan embarked on an ambitious overhaul.

She got off to a rough start. Some people working at the FTC in Khan’s first days say she was a poor manager. “There were, at the beginning, some challenges,” she says. After a wave of bad press, she brought in Elizabeth Wilkins, a Biden White House alum, as her chief of staff. Wilkins says she saw Khan work to improve her management skills, making sure merger attorneys had the chance to weigh in on standards and bringing career staff along to meet more civilians affected by the FTC’s work. Some staffers and activists have remained frustrated by Khan’s hands-on approach and think she could get more done if she were more willing to delegate. Still, even these critics tend to agree the agency is doing more, faster, than it has in recent memory.

“There’s a real sense of pride and momentum, and that creates an adrenaline that helps people put in the long hours,” says Bill Baer, a Clinton FTC and Obama Department of Justice appointee who’s now a fellow at the Brookings Institution and follows the agency closely. “She’s made as much progress as one could ever hope for in the limited time she’s had.”

Khan says she’s sped things up by cutting red tape that the FTC had been “handicapping itself” with, making changes like reducing the number of staff reports required during the rulemaking process. “There was long a perception that this was such a bureaucratic maze that it’s not even worth doing,” she says. Similarly, she frames her approach to mergers as a return to first principles of antitrust law rather than an activist project.

It’s a big change. Those new merger guidelines, a joint project with the Justice Department, effectively “reformulated merger law,” says Spencer Weber Waller, a law professor at Loyola University Chicago who advised the FTC in 2022. Before, a pledge to cut prices by slashing labor costs would’ve likely been seen as a reason to OK a deal, Waller says. Now it has a greater chance of being invoked to stop one, because the agency has prioritized employees as well as consumers. (“We’re textualists,” Khan says. “We make sure that the way we are proceeding is faithful to what Congress said and wanted.”)

The FTC has made that part of its mandate central to its fight against the merger of supermarkets Kroger and Albertsons Cos., which it argues will hurt workers and customers. (Kroger disputes this, as does Albertsons, which declined to comment.) Khan held a series of “listening sessions” about the deal, hearing from workers about how a past merger spurred layoffs and closures. “Enforcers have not always gotten it right,” she told a crowd in Denver, saying she felt a “special obligation” to do better. Company reps attended, but when Khan asked whether anyone wanted to speak up in favor of the deal, they stayed silent.

One of Khan’s biggest targets has been noncompete agreements, which restrict as many as 30 million Americans from quitting their jobs to take better offers, everyone from warehouse workers to food-service staff. Take, for instance, Deborah Brantley. She’s said in court filings that when she was 21, she started getting sexually harassed by co-workers and management at Kavasutra North Palm Beach, the Florida kava bar where she worked. Kavasutra’s owners rubbed against her backside, joked about her sex life and pressured her to drink until she vomited, she said in a legal filing. When she raised safety concerns, an owner said she was coming off “bitchy.” When she complained about customers touching her inappropriately, managers suggested she was being dramatic, or flirting or on her period. The general manager told her: “It would be so easy to roofie you and rape you,” and said that with the herbal substance he slipped into her drink, “you won’t be such a bitch and then maybe people would like you more.”

When Brantley quit and took a bartending job elsewhere, Kavasutra sued her for violating a noncompete agreement, claiming she’d caused the company “irreparable injury” and owed damages plus attorneys’ fees. Brantley eventually found a lawyer willing to help her countersue on contingency, but for a while she was stuck representing herself. “I very much thought I was going to be destined to a terrible life because of this,” she says. “I used to feel like a skinny dog tied up to a tree, left outside.” The Kavasutra chain’s Instagram page, in between posts advertising bingo night and urging #FreeTrump, features notarized affidavits from two ex-employees admitting to breaching noncompetes, proudly displayed like stuffed deer heads. The “breach of my Non-Compete Agreement caused myself and my family a financial and emotional burden,” states each affidavit. The Instagram caption reads: “Two for two …”. Kavasutra, which moved to dismiss Brantley’s counterclaim, didn’t respond to inquiries.

Brantley was one of 25,000 people who submitted a comment to the FTC in favor of banning noncompetes. (The other side mustered about 1,000.) “I really felt hopeless, that the only chance I had, essentially, at not being homeless was the FTC,” she says. Last year the FTC unveiled its proposed rule, a sweeping ban. A federal judge in Texas would eventually block the rule, and it may not make it past conservative appellate judges or the US Supreme Court. Khan calls this a pause. “We’re going to keep fighting,” she told a crowd in Austin in early October. “This is just so important.”

Whatever the courts decide, Khan has had an impact on the practice. The FTC’s rule has fueled legislative efforts in Congress and several states, and the federal Department of Transportation has been exploring a similar measure. The FTC has also gotten some companies to drop noncompetes as a condition of their mergers, and it’s started suing companies whose noncompetes it deems unfair, which may be enough to dissuade other employers from holding firmly to their own.

Some months after the FTC’s proposed rule was announced, Brantley reached a settlement with Kavasutra. She opened a kava bar about 400 feet away and got a leg tattoo of a dog that’s broken free. Khan “kind of gives me hope,” Brantley says. “Reading some of the stuff Ms. Khan said made me show up and feel like I have a shot at changing things in my community and in my society.”

Khan has had the opposite effect in some corners of Silicon Valley. She’s taking on practices that business leaders widely regarded as standard or, in some cases, fundamental. She’s threatening the casual surveillance that powers digital advertising, working on regulation that would govern how companies collect and profit from people’s data. She’s moving to finalize a rule that would require companies to make it as easy to cancel a subscription as it is to sign up. And what used to be a green light for most megamergers is now blinking yellow.

Khan’s agency derailed Nvidia Corp.’s acquisition of chip designer Arm Ltd.—and tried to stop Microsoft from buying the video game giant Activision Blizzard and Meta from buying the virtual-reality app Within. Although judges ruled against Khan on the latter two (the FTC is appealing the Microsoft decision), venture capitalists argue these fights create a climate of fear, hurting small startups by making it harder for them to sell themselves off to big ones. “SHE’S KILLING M&A & BREAKING THE VENTURE INDUSTRY,” tech investor Jason Calacanis posted on X in August. He attached a chart showing declining VC returns and called Khan a “COMMUNIST,” adding “THESE LUNATICS HAVE NEVER BUILT ANYTHING OF VALUE.”

Calacanis’ all-caps sense of betrayal is becoming more common. What bugs many of Khan’s critics isn’t simply her approach to policy, but the way she talks about them. “The underlying tone is like Elizabeth Warren,” says Mark Pincus, who founded video game company Zynga and now works as an investor. Pincus tried to persuade Warren to back off her criticism of tech giants. “When you attack Amazon, you’re attacking America,” he says, recalling one of those conversations. “It’s providing all the jobs and paying all the bills.”

There are costs, some of these critics warn, to picking on allies. “She’s hitting the pocketbooks of Biden donors,” says Dmitri Mehlhorn, who co-founded an advocacy group with Hoffman and was his political adviser until earlier this year. “The money that was going to be given to Democrats isn’t there.”

Khan says donor interests don’t dictate her agency’s law enforcement. She says her work is meant to strengthen the markets of Silicon Valley so that “upstarts and disrupters and tinkerers have a fair shot at competing” and that the vast majority of mergers are proceeding normally. “As long as you’re not selling to the monopolist, you probably will not run afoul of the law,” she says. “A market in which the only ideas that are ever brought to market are the ideas that you think will be appealing to the existing incumbents, I think really short-circuits the type of free enterprise, decentralized, competitive market system that historically has led to huge paradigm shifts.”

Khan has fans who say that by scrutinizing the dominant players, she’s indeed making it easier for startups to compete. “It’s bad for American society when too much power is concentrated in the hands of the very few,” says Garry Tan, chief executive officer of Y Combinator, an incubator in San Francisco that’s hosted Khan. In the past, Y Combinator backed hundreds of companies that offered software directly to consumers on the web. Now, Tan says, that’s basically impossible, because the biggest tech companies choke out upstarts. “They’re pulling up the ladder behind them,” he says. “You can’t build a consumer business now.”

Tan and like-minded startup types have taken to using the phrase “little tech” in framing a battle against Big Tech. They praise Khan using the online slang of unapologetic conservatives. “I think she’s very capitalist,” Tan says. “Lina Khan is based.”

Khan’s FTC term ended in September, but the law lets her continue in the job unless she’s replaced. “We need more Lina Khans,” says Senator Sanders. “To not reappoint her would be, really, a major setback.”

Harris has stayed mum on the issue. In an email, Mark Cuban, the billionaire investor and informal adviser to the Harris campaign, says Khan “has done a great job with misleading ads online and fighting PBMs” (pharmacy benefit managers, the industry’s middlemen), but adds that he thinks she’s “far outstepped her bounds on the M&A front.” He also argues that Khan’s approach to tech has harmed America’s “ability to compete with China and Russia in AI.” Absent a more direct opinion from Harris herself, though, Khan supporters are feeling optimistic that the open opposition of donors such as Hoffman will prove good for Khan’s longevity. Fighting billionaires is a popular position these days. “We should be thanking Reid Hoffman at this point, because now he basically ensured that she’ll stay,” says AFL-CIO President Liz Shuler.

At a Friday night town hall meeting organized by Democratic Representative Alexandria Ocasio-Cortez of New York in September, which drew a crowd of several hundred in the South Bronx, a series of panelists credited Khan with helping them get a fair shake, including workers who denounced private equity, PBMs and noncompetes. “She’s taking on corporate giants in a way unlike we have ever seen,” Ocasio-Cortez said. When her turn came, Khan gave what felt like a mini stump speech, framing corporate consolidation as the root of most everyday problems. Companies, she said, have been “ripping you off, hiking prices, stealing from you.” This could be stopped, she said, by “enforcing the law.” Afterward she was mobbed with requests for selfies.

Democrats in purpler states have also been talking up the FTC. On Oct. 4, Ruben Gallego, an Arizona congressman and Senate candidate, hosted Khan for a roundtable about abusive landlords, where he praised her for working “to actually keep the free market free.” Khan’s profile has some in her orbit picturing her leading the Treasury Department or, maybe, taking on an even bigger job. “She’s the most famous competition policy person in the world,” says former FTC Chair William Kovacic, a George W. Bush appointee and director of George Washington University’s Competition Law Center, who compares her poise under congressional questioning to that of Chief Justice John Roberts. “I think she will be a member of our Supreme Court someday.”

Khan says there’s plenty to keep her busy at the FTC. The grocery prices discussion, she says, is an important opening to talk about how prices are shaped by “abuse and exploitation.” She notes that Florida (now Trump’s home state) already bans price gouging: “I think you’d be hard-pressed to find somebody to say Florida is a communist state.”

Khan recently met with gig workers who described how companies use opaque, mercurial algorithms to control their livelihoods. “You may see enforcement activity in the coming months as well in that vein,” she says. While the FTC is working on its new data rule, it’s also begun factoring companies’ control of users’ personal data into its consideration of mergers. And it’s been quietly researching artificial intelligence, an area where its broad authority to tackle unfair and deceptive practices will prove particularly important, says David Vladeck, a Georgetown University law professor who served as the FTC’s consumer protection chief under President Barack Obama. “It will be the thin blue line in trying to ensure that AI doesn’t cause harm,” he says. In late September, the agency announced a crackdown on the use of AI to facilitate fake reviews, sketchy online storefronts and other scams.

“There’s no AI exemption from the law,” Khan says. “If you’re deceiving people through algorithms, you don’t get some type of free pass because you’re saying, ‘Oh, the machine did it.’ ”

Khan says the growing spotlight on the FTC’s battles should help keep the standards she’s setting in place. “The bipartisan agreement that the way we’ve been doing antitrust needed to be revisited and adapted and updated to match the realities of how businesses are operating in the 21st century, that’s not going away,” she says. “The more and more these legal tools are recognized as having such a huge impact on people’s day-to-day lives, on our economy as a whole, I think that also creates institutional durability.” Khan’s bet, in other words, is that what she’s done will keep getting tougher to unwind no matter who ends up in charge of the FTC, though she acknowledges that “it’s easier to dismantle than it is to restart.”

Critics say this is wishful thinking, that the Khan-era vibe shifts will fade if she leaves the agency and her pending lawsuits falter in court. Then again, some workers on the ground sense a deeper shift taking place. Jonathan Jones, an emergency room doctor living in Jackson, Mississippi, is a former president of the American Academy of Emergency Medicine who, like many in his profession, has struggled to navigate noncompetes. It’s sheer luck, he says, that he didn’t have to drag his wife and daughter to another state after one job left him physically wrecked. He visited DC repeatedly to advocate for a ban but felt he’d gotten nowhere until he met with Khan last year. “I called my wife as I was walking outside,” says Jones. “I said we’ll see what happens, but I really feel that finally someone’s listening.” —With Leah Nylen