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Big Tech Tries to Defund the Police
The biggest lobby in D.C. - the U.S. Chamber of Commerce - has a reason to go after Lina Khan. Demonizing her sells.
Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…
Today I’m writing about the business lobby and the campaign to stop the antitrust agencies from doing their job.
But first, here are a couple of BIG pieces you might have missed.
Unilever CEO: "We will, of course, continue to take further price increases....": I started collecting what corporate executives have been saying about price increases on investor calls of late. Basically, large firms have pricing power, while small ones do not. That’s consistent with the theory that market power is driving at least some of the inflation we’re seeing.
Yes, Facebook Is Still a Monopoly: One of the points that Mark Zuckerberg made last week on Facebook’s earnings call is that TikTok is a real and significant competitor. Several key thinkers on market power questions used this moment to argue that the rise of TikTok suggests the various antitrust suits against Facebook are misguided. I wrote up my views on why Facebook’s monopoly power remains intact.
Antitrust Is Responsible for the Metaverse: That said, antitrust is having an impact on Facebook’s business model, in a positive way. The inability of Facebook to buy rivals is a key reason the firm is now investing in virtual reality. Without the ability to acquire dominance, the only route to success is… innovation.
And now…
The Defund the Police Strategy
Earlier this week, Republican Federal Trade Commissioner Christine Wilson unveiled the strategy that big tech firms are going to use against antitrust enforcers engaged in an increasingly popular campaign against monopolies. "I think leaders on both sides of the aisle should think long and hard before increasing our funding or our authority,” she said, “if the commission can't demonstrate an ability to work in a bipartisan way."
When Wilson says that the FTC is too partisan, what she means is that the commission isn’t sufficiently deferential to monopolies anymore. In late 2020, the FTC, with a Republican majority, filed an antitrust case against Facebook. Wilson opposed bringing that suit. Last year, the FTC, this time under Democratic control, refiled this same antitrust case against Facebook. Wilson again opposed bringing it. It’s not about party, it’s about Wilson’s fealty to monopoly power. It’s a rather notable action for a regulator to call for reducing funding and authority to her own agency, especially someone like Wilson, who likely hopes to become the full Chair at some point.
But in context, it’s not so surprising. Wilson called for restricting funding the same day she spoke before the U.S. Chamber of Commerce, which is the biggest business lobby in D.C., and one that has openly declared a ‘war’ against the FTC. In December, the Chamber lobbied Congress to oppose expanding funding for the FTC. Then yesterday, the Chamber’s President Suzanne Clark spoke to Bloomberg, attacking enforcers and calling for weaker antitrust enforcement.
These comments are an echo of Clark’s “State of American Business Address” back in January, in which she mentioned how firm size shouldn’t matter when it comes to enforcement. In her interview yesterday, Clark got more specific. She mentioned the need to maintain the consumer welfare standard on antitrust, which reflects a long-standing mindset in which enforcers act as deal-makers to facilitate mergers, instead of cops policing markets for unfair behavior. She talked up the bipartisan consensus in favor of that approach, and how it has worked for decades. But it’s a losing battle, which Clark surely knows.
While politics is generally polarized, on antitrust, legislation keeps moving with support from both sides. An app store bill passed the Senate Judiciary Committee 20-2 a few weeks ago, despite personal intervention from Apple CEO Tim Cook and Google CEO Sundar Pichai. Judges are increasingly treating big tech firms with disdain, and even the Pentagon is getting involved. The latest problem is that the Heritage Foundation, which is the institutional fount of Reagan Republicanism, just released a report calling for stronger antitrust enforcement, and stronger privacy rules, against big tech firms. That is a shocking turnaround.
These political shifts parallel what has been an amazing two-week run for the FTC. On Super Bowl Sunday, Lockheed Martin dropped its attempt to buy Aerojet after being challenged by the commission. This follows the semiconductor giant Nvidia ending its acquisition of chip designer Arm. "FTC chair Lina Khan is now two-for-two in merger block attempts,” wrote D.C. insider tip sheet Axios, “following Nvidia bailing on Arm, without having to make her case in court.” And these are vertical merger challenges, which haven’t succeeded in court for 50 years, and yet the environment has changed so much that firms give up rather than litigate.
The FTC, either directly or indirectly, has actually blocked more deals than that, such as an acquisition by Berkshire Hathaway of a Utah pipeline, Bass Pro’s attempt to buy Sportsman’s Warehouse, and Proofpoint’s attempt to buy Memecast. It’s a very weird moment, where dealmakers want to foster combinations because of extremely high profits and still-cheap capital, but the regulatory environment is changing.
Regardless, it’s becoming increasingly clear that Khan and Antitrust Division chief Jonathan Kanter are no joke, and that there is interest and some support on the right in what they are doing. This dynamic creates significant problems for big tech firms like Google and Amazon. The pro-monopolists are losing the argument, badly. So what is the response? The answer is they are trying to cut the funding for antitrust enforcers who police our markets. The strategy, in other words, is to defund the police.
And Wilson, the Chamber, and big tech really have no other choice but to pursue the ‘Defund the Police’ strategy. And as much as I wish this strategy won’t work, the funding problem for the agencies is very real. Right now, for instance, the Antitrust Division may not even be able to afford to bring an antitrust suit against Apple, considering it is already tied up with one against Google. Imagine that - the cops can’t enforce the law against big tech because they simply don’t have the money to do so.
And that’s not even getting into the problem of mergers, which are a massive drain on the agencies right now. To stop a merger, agencies have to do an extensive investigation, which is resource-intensive. In the 1970s, the antitrust agencies received about 150 reports of big mergers a year. Today, because of a merger wave kicked off by cheap capital from the Federal Reserve, they get that many every two weeks. This kind of merger wave puts a huge burden on enforcers. Beyond that, the head count of the agencies is actually lower than it was in the 1970s, and the staff culture is meek, due to decades of leadership focused on deal-making rather than law-enforcement.
Here’s Khan describing the resource constraint.

So the strategy of ‘Defund the Police” is their only real strategic option, for now.
Big tech firms, and their operatives like Clark and Wilson, however, face an even bigger problem than a newly assertive set of enforcers. The anti-government consensus within corporate America - one that the U.S. Chamber is supposed to represent - has fractured.
What Is Behind the War?
People generally assume that the voice of big business is unified and well-represented by trade associations and lobbyists. That’s not quite right. Big firms are giant bureaucracies, and they are run by collectives of feudal chiefs, oriented around favor-trading and turf. And lobbying itself is a business with its own problems, institutions, methods, and conflicts. Last year, for instance, in a shocking turn, what had been one of the largest trade associations in D.C. - the Internet Association - simply dissolved after its members fought with each other over antitrust.
The Chamber’s open declaration of war against the FTC a few months ago, as well as the Chamber’s CEO singling out the FTC in her ‘State of American Business’ speech in January, certainly raised eyebrows, even among the Chamber’s own members.
The Chamber is in fact an odd organization, both decentralized and top-down. It does serve as a forum for private debate among some businesses, hosting conference calls and meetings where lobbyists get together and hash out possible points of agreement and disagreement, to form a unified voice for business policies or programs. It also has a federated structure, with local, state, and even international chambers that collaborate. But there’s not really a way to force consensus, and often the Chamber speaks out even though many of its members disagree simply because it is getting a lot of money from one particular member to do so.
The Chamber is also a set of independent sub-organizations with names like “the Litigation Center” and “The Technology Engagement Center,” each of which is independently funded and controlled by interested corporations, and each of which can organize events and engage in legal and policy activity. That each sub-organization is controlled by a small set of corporations isn’t well-known. Most policymakers and voters simply think that a policy brief or statement comes from the U.S. Chamber of Commerce’s Litigation Center, not that it comes from, say, Anthem or NuScale Power, or Facebook. A small group of firms run the Chamber’s antitrust division, and these firms include Google, Apple, Facebook, and Amazon, as well as other giants like Fedex, Cisco, Verizon, and Comcast.
The U.S. Chamber also offers a convenient front group for any large firm that wants to dump a bunch of money into an electoral campaign but not have its name attached. If, say, Pfizer, were ever to want to oppose a plan while presenting itself publicly as an ally on providing cheap drugs to everyone, it could write $50 million check to the U.S. Chamber to run ads against the politicians it is pretending to work with.
To Destroy Antitrust, Click Here
And with that in mind, let’s talk about why the Chamber is singling out Lina Khan. The Chamber is in some ways in deep trouble, with a sort of branding crisis. Traditionally, the Republicans have been quite attentive to the Chamber for ideological reasons, but the Chamber has lost influence on the right over the last few years. Here for instance is Ohio Senate candidate J.D. Vance going after the core ideology of big business Republicanism.


Now, the Chamber isn’t just an association of businesses with a long and storied brand, it is also a business itself, and in that, it competing with a host of other trade associations in D.C. for members and dollars. Like a performative politician using culture warring to get likes, business lobbyists often try to capture the most incendiary argument as a marketing strategy. The Chamber’s so-called “war” on Lina Khan is so that officials like Sean Heather, who is running the Chamber’s antitrust work, can attract more dollars to his antitrust program. It’s a fundraising strategy, no different than a Democrat using the demonization of Trump to entice donors or a Republican doing the same in reverse.
For business lobbyists, Elizabeth Warren is the evil boogieman, the one figure who strikes a sort of existential dread into the CEO or private equity partner. A savvy lobbyist can use the symbolism of Warren to pry more budget out of their bosses, who are often emotionally triggered by Warren the way that Democrats feel about Trump. They can also use Warren to manipulate the rest of the business community as a sort of maintainer of corporate solidarity. If Warren likes something, then many business leaders are instinctively going to oppose it, even if doing so doesn’t make sense for their particular goals. Business lobbyists and certain Republicans have engaged in a campaign to portray Khan as a Warren disciple, seeking to build up Khan as a figure they can profitably use to raise money and organize the business world.
It’s a somewhat silly characterization for both Warren and Khan, whose ideas have caught on globally and even within the corporate world. Many large firms are supporting the antitrust bills in Congress, bills which are a direct result of Warren’s advocacy and Khan’s scholarship. And far from being reflexively anti-big business, Khan’s first major merger challenge - Nvidia-Arm - was also a merger opposed by Google, Amazon, Qualcomm, and other dominant firms in the space. So to see Khan as some enemy of corporate America isn’t quite right.
Nevertheless, the Chamber has been sending out a lot of material on their attack on Khan; this, for instance, was on their website’s front page a few months ago. The audience here is as much potential firms who might fear the FTC and fund the Chamber as it is policymakers.
Another theory on why the Chamber has gotten so aggressive is that Google and Amazon have financed the Chamber, among other groups, to go to war with the FTC for their own purposes. This is also almost certainly true as well. Amazon just became a member last year, and Facebook, Google, and Amazon are now on the board of the Chamber. Most trade associations in D.C. take money from these firms, and then do what they wish.
The Chamber’s goal is to unify the big business community against changes to antitrust law, which is difficult right now because everyone on K-Street understands that there’s something unique about big tech. That said, very few big companies actually want to change the basis of antitrust law to something other than the consumer welfare standard, as most do mergers and engage in activity to monopolize markets, or at least try to. So they don’t share Khan’s aims, even if they don’t want a war.
And there are things about Khan that make them very nervous. The FTC’s study into supply chains - with information demands to nine big firms - has scared some big players in corporate America beyond big tech. Here’s the CEO of Walmart, for instance, being confronted on Good Morning America with inquiries about the investigation.
The more the FTC fiddles with corporate America, the more successful the Chamber’s fundraising campaign, or so goes the thinking. The problem is that most members of the Chamber are not on board with the incendiary rhetoric about “war” with the FTC, and are cross-pressured on antitrust. Khan’s reputation is not good among lobbyists, but she just hasn’t done anything particularly egregious to warrant such rhetoric. And a lot of firms do actually want a crackdown on big tech, whose dominance is threatening businesses across the economy. That said, there is one group in corporate America that absolutely despises Khan, and the entire movement she stands for. The Antitrust Bar.
The Sorcerers
Within corporate America, antitrust lawyers have a special place, because antitrust law can involve fines and jail time for executives, and it can interfere with mergers, which is as close to one gets in terms of finding a religious activity on Wall Street. While researching this story, I talked to a business lobbyist who told me something fascinating about the internal politics of corporate America. “You don’t get into a fight with the antitrust lawyer,” he told me, “because they’ll cut your head off.” I’ve seen this myself, where a corporate lobbyist will promise something and then the antitrust lawyer will big-foot him.
Antitrust lawyers inside the corporation have a weird internal prestige. These lawyers see themselves as part of a secret order of sorcerers, bestowed with the special honor of controlling a mysterious and magical elemental force known as “antitrust,” an opaque area of law which no one really understands. Antitrust isn’t actually hard, but the law as currently constituted has three things that make it difficult to contemplate. It is arbitrary, it makes no sense, and it is insanely boring. And yet if executives don’t listen to the antitrust lawyer, they perceive themselves to risk large penalties, to have their mergers blocked, and even face jail time. Moreover, within the firm, a CEO or SVP might see value in stronger antitrust if they fear a competitor, but that person would have to face down a rabid and angry internal lawyer to change internal corporate policy. And it’s just not worth it.
(If you want to know why the law is confusing and dumb, here’s a brief explanation. Antitrust law is oriented around what is called the “rule of reason,” meaning that a judge decides whether that specific action is legal or illegal depending on whether he thinks it’s reasonable. That judging method makes no sense, because it’s impossible to know whether an action is legal or not until you’ve gone to court. The Rule of Reason is compounded by the way judge decide whether something is reasonable, which is called the ‘consumer welfare’ standard. The consumer welfare standard, though the term is much disputed, essentially means that a fancy economist makes a guess about whether an activity is harmful or not to the economy. In fact, the only real rule of antitrust for the last few decades is that having a lot of money and extremely fancy lawyers gives a monopolist the ability to do anything without fear of legal sanction.)
These fancy lawyers know each other, and have a solidarity that is rather remarkable. I listen to a podcast called Our Curious Amalgam from the American Bar Association Antitrust Section, and the mix of boring tones and quiet rage at the ‘extremists’ now in office is remarkable. A few months ago, there was an interview with bank merger specialist David Neill. We learned that Neill’s hobby is Scrabble, and that he simply cannot believe anyone would want to make bank mergers harder.
But you don’t have to take my word for it. Jessica Rich, a progressive former consumer rights advocate and FTC official turned corporate lawyer, wrote one of the endless number of boring rage pieces coming out of big law firms about Lina Khan, with the latent goal of convincing corporate CEOs to join a campaign against the new anti-monopoly movement. Here are some excerpts, in which Rich suggests Khan is an out-of-control lawless partisan seeking to override a demoralized staff. I’ve bolded the relevant passive aggressive insults.
So far, the agency has announced relatively few cases (as opposed to policy statements, plans, and process changes), creating ever more pressure on Khan and her appointees to speed things up and “think big.” In some instances, this has led the agency to take legal and procedural shortcuts that could backfire in the long run…
One of these tools is to blanket the marketplace with penalty offense warning letters (over 1800 sent so far) to lay the foundation for obtaining civil penalties in later cases – an aggressive use of a little-known legal provision that we believe is a big stretch under the law…
In certain instances, these heightened demands appeared suddenly after Khan joined the agency. FTC staff are often at a loss to explain their positions and seem to have little authority to alter them…
And that brings us to our next big observation – “top down” management. For as long as we can remember, most FTC cases and initiatives have filtered up to the Commission from career staff, both to ensure decisions on the merits (by nonpolitical staff with deep expertise) and maintain an organized deliberative process. In contrast, most decisions today appear to be coming from the top. As a result, it’s difficult to make progress simply by talking to career staff, who are not empowered or “in the know.”
In addition, many decisions appear to be driven by a desired outcome, not built from the evidence and governing law. For example, the FTC appears to be naming individuals as defendants reflexively, even though the law requires proof of participation or control over the alleged violations…
The agency, at least for now, has abandoned its bipartisan traditions…
With an aggressive and unpredictable FTC, whose positions may not always comport with sound law and policy, the need for advocacy and strategy has never been greater…
This rage, if I had to guess, is driven less by policy disagreements and more by the anger that people feel when their moral worth is questioned. Rich is a former vice president for Advocacy at Consumer Reports and head of the FTC Bureau of Consumer Protection under Obama. She sees herself as a strong liberal, not as one more millionaire who lives in the suburbs of D.C. and helped engineer the current economic order we live in today. This is how Rich presents herself on her BigLaw bio page, as a moral exemplar, not as someone billing out at $1000/hour.
As such, Lina Khan’s existence offends her. Khan is 32, and made her career on the idea that cheating people is wrong even if an economist chart says that it’s efficient. That just upsets a lot of lawyers who thought, honestly enough, that they were doing good work.
There are lawyers like Rich throughout corporate America and in government, and they are pressing their bosses to get aggressive against the FTC and assertive governance elsewhere. It’s not in the interests of many of these firms to do so, but large businesses are ossified bureaucracies, and no one wants to tangle with the antitrust lawyer.
What’s really going on here is a bitter conflict over the ideological underpinnings of our culture. In the 1930s, New Dealers tussled angrily with the old guard, until a new generation of business leaders took over in the latter part of the decade, a generation willing to actually work under the new rules a democratic government laid down. That’s sort of what’s happening now. There are conflicts within the business world, within politics, and within both parties. Institutions like the Chamber, which is really driven by fundraising from large firms to do specific political projects rather than representing the true voice of business, will shift in turn. Sometimes the newcomers lose, and the old guard maintains the status quo, as happened during the late 1910s and early 1920s.
But regardless, those are the stakes. And that’s why Christine Wilson, the U.S. Chamber of Commerce, Google, Amazon, and Facebook are trying to defund the police.
What I’m Reading
Statement Regarding Termination of Nvidia Corp.’s Attempted Acquisition of Arm Ltd, Federal Trade Commission. “This result is particularly significant because it represents the first abandonment of a litigated vertical merger in many years.” - FTC Enforcement chief Holly Vedova
Bay Area ranchers open mobile meat plant, Marin Independent Journal
Protecting the U.S. Postal Service from Amazon’s Anticompetitive Assault, Econ One, by Hal Singer and Ted Tatos
Is this the end of an Olympic ticket monopoly? The Hustle
Some Republicans on Wrong Side of Big Tech Battle, Polls Show, Inside Sources. Rep. Jim Jordan will likely be the Chair in charge of the committee that writes antitrust law, and he is known as a friend to big tech. The problem is that his constituents won’t like that posture, if they ever learn of it. “A new poll of Ohio’s 4th Congressional District finds 81 percent of voters fear executives of large technology companies like Google, Apple, Facebook, and Amazon have too much power, and 87 percent want the federal government to do more to curb abuses by Big Tech firms.”
Why Facebook's antitrust problem in Congress isn't going away, Washington Post
How TikTok Screws Creators, Hank Green
Thanks for reading.
And please send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues, a newsletter on how to restore fair commerce, innovation and democracy. And consider becoming a paying subscriber to support this work, or if you are a paying subscriber, giving a gift subscription to a friend, colleague, or family member.
cheers,
Matt
P.S. I am looking for stories of intimidation and retaliation by monopolists. If you have one, let me know. I will keep your information private.
Big Tech Tries to Defund the Police
This is such an excellent overview of the current stakes, and one that almost no one is discussing. I'd guess that 80% of the country, regardless of political orientation, would be thrilled to learn of the Biden's administration bold actions in this space, yet it's ignored by big media and not mentioned by the Democrats. I don't understand why so many popular actions by the administration, including those by executive order, are done quietly when they would gain widespread approval if anyone knew what they had done.
"This rage, if I had to guess, is driven less by policy disagreements and more by the anger that people feel when their moral worth is questioned." An intelligent guess. Scratch their veneer, you find this shadow denial dynamic. Go Matt.