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FTC Chair Lina Khan Wants to Prosecute Big Tech ‘Mafia Boss’

Posted on by darion

What happened? The FTC is going after Big Tech and it doesn’t just want henchmen; he wants “mafia bosses.” These are the words of the agency’s president, Lina Khan, who, instead of increasing the number of cases, wants to focus on those in the industry who cause the most harm.

Khan made the mob analogy during a speech earlier this week at the TechCrunch Strictly VC event in Washington, DC. “One thing that has been important to me is making sure that we actually look at where we see the most harm.”

“Where do we see players systematically engaging in this illegal behavior? “Being able to get to the ‘mob boss’ will be more effective than going after the henchman at the bottom,” the FTC chairman added.

Khan’s comments come at a time when the FTC is going after tech giants like never before. Last week, the Wall Street Journal reported that the commission was examining Microsoft’s deal with AI startup Inflection. Microsoft hired Inflection CEO and co-founder Mustafa Suleyman in March as CEO and vice president of Microsoft AI. The Windows maker has agreed to pay Inflection $650 million to license its AI software.

The FTC is investigating whether the Redmond company structured the Inflection partnership to avoid government antitrust scrutiny of the deal.

The FTC has also taken an interest in the artificial intelligence market. It recently struck a deal with the Department of Justice to investigate Microsoft, OpenAI, and Nvidia. Team Green, which has gained a valuation of $3 trillion thanks to the sale of advanced AI equipment, is under intense scrutiny to determine whether it has broken antitrust laws. OpenAI and its largest investor, Microsoft, are also in the FTC’s spotlight.

Other tech giants, including Meta, Google and Apple, have been the target of FTC investigations over the years. The antitrust investigation into Amazon began in 2019. The main allegation in the lawsuit is that Amazon abuses its market dominance to reward sellers who use its logistics (warehousing, shipping) and advertising services, punish those who do not, and lock in lower prices to competing websites.

Khan said that if he is successful in the cases brought against Big Tech, it could have a positive impact on the market. This may also act as a deterrent to other companies, as they may reconsider engaging in potentially infringing transactions due to fear of an FTC investigation.

“Five, six, seven years ago, when you were thinking about a potential deal, antitrust risk or even antitrust analysis was not on the agenda,” Khan said. “And now the issue is front and center. So, for the person responsible for enforcing the law, if companies have to think about this legal issue at the forefront, that’s really good because we don’t have to spend so many public resources making transactions.”

Khan said up to 3,000 merger applications are filed annually in the U.S., but only 2% of them are reconsidered by the government. She added that it’s safe to assume that 98% of these deals will go through and that even for startups looking for an acquisition, it would be better to have six, seven or eight potential suitors rather than one or two, because that would promote competition and ensure they get a better valuation.

Masthead: HBO

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FTC Chair Lina Khan Wants to Prosecute Big Tech ‘Mafia Boss’