11 ms·

FTC Chair Lina Khan looks for allies and leads in Silicon Valley charm offensive

99 points by scyzoryk_xyz 3y ago

scyzoryk_xyz 3y ago
From the article: In her first trip to the tech hub home to giants and startups in her role, Khan had a key message for Silicon Valley across talks, dinner and events all over the Bay Area: She's a friend to entrepreneurs and founders. "I think it's really important for D.C. to begin engaging directly with the founders with startups, and getting a better sense of what are the risks you see," Khan said at startup accelerator Y Combinator on Friday.
jldugger 3y ago
Instagram had 13 employees[1] when FB bought it. IDK how you stop that kind of anticompetitive behavior without removing one of the big VC exit strategies. [1]: https://www.businessinsider.com/instagram-first-13-employees-full-list-2020-4#maykel-loomans-was-one-of-three-employees-who-joined-instagram-right-before-it-was-acquired-1 https://www.businessinsider.com/instagram-first-13-employees...
- gizmo686 3y ago
  Who says you cannot remove the exit strategy? A business model of selling out to the monopolist is not innovation; it is a few investors extracting protection money from the monopolist. To the extent that VC produces genuine innovation, they should be able to extract profit by either drawing dividends from the profitable company they own, or selling their share on the open market to other investors who anticipate being able to collect dividends. That we have a whole class of investors whose strategy is to sell to a few monopolistic firms seems like a clear indication that the market is not healthy.
  - JumpCrisscross 3y ago
    If exit to the dominant player is prohibited, and competing against them is prohibitive, you’re not going to get new entrants. This strengthens the incumbents’ positions. Blocking M&A (of start-ups) before committing to break-ups is worse than doing nothing at all.
    - bogwog 3y ago
      > competing against them is prohibitive Can you explain this part? Do you mean it's prohibited, as in the FTC's actions/policies mean small companies are not allowed to compete? Or do you mean that it is difficult, as in small companies are not able to compete? Part of the reason big tech does so many acquisitions is to reduce the amount of competition they face from what they see as competitive threats. We might not see startups with broken/unsustainable business models anymore, but that's a good thing. If big tech can't buy out their competition, they will need to actually compete. History has shown that entrenched monopolists can't compete with smaller and more innovative companies. Consumers and the economy will benefit more from those types of companies growing into their own things rather than merging them into the existing big tech behemoths. What would the world look like today if Facebook (or any other giant) wasn't allowed to acquire Instagram? Instagram could've continued to grow, they could've acquired more funding, poached users from Facebook, etc. That could've inspired some other social media startups, and they'd be fighting it out with Instagram/Facebook too. Everybody (except maybe Facebook) wins in that situation. Alternatively, imagine where TikTok would be right now if they were an American company and Facebook actually had the opportunity to buy them out early?
  - deleted 3y ago
    [deleted]
- bogwog 3y ago
  > without removing one of the big VC exit strategies Are you saying that's a strategy that we should try to preserve? As a user of tech, have you never been screwed when a company suddenly got acquired by a tech giant and then went to shit/got shutdown/etc? This kind of thing leads to unsustainable bullshit companies that always end up harming consumers and markets in the long run.
- theptip 3y ago
  It was obvious at the time that FB buying IG was anti-competitive. Anyone not operating the main social network at the time could have bought them without competition concerns, or they could still have IPO’d. Sure, by enforcing this you decrease in expectation the maximum payout for a startup, but you plausibly increase the viability of small/medium payouts and viable non-VC models like bootstrapping.
  - jldugger 3y ago
    I figure the tricky part is figuring out a rule that doesn't make buying any struggling 13 person startup an FTC enforcement risk.
coding123 3y ago
What. Why do this?
- lazide 3y ago
  First you demonstrate the threat. Then you hold out the hat.
  - justrealist 3y ago
    Except she blew all her powder on ill-conceived FTC lawsuits that failed. This is a kinda pathetic plan B.
    - lazide 3y ago
      Sure. But that doesn’t make it not what is happening!
- gpm 3y ago
  When you're told by executive order that you're supposed to start regulating AI, talking to the people who do AI seems like the obvious responsible first step...
- Dr_Birdbrain 3y ago
  My best guess is she’s hoping to “divide and conquer”.
megaman821 3y ago
Good luck with that. I was listening to an interview with her, and she seems neither likeable nor do her legal theories sound convincing. Her criterion for antitrust action is so broad, it would turn the FTC into a political cudgel. Since nearly every acquisition or merger would violate the new FTC doctrine in some part, there is no choice but selective enforcement.
- thisgoesnowhere 3y ago
  Link?
  - hoppyhoppy2 3y ago
    Possibly https://www.npr.org/2023/11/03/1197954506/lina-khan-interview-amazon-ftc-antitrust-paradox-monopoly https://www.npr.org/2023/11/03/1197954506/lina-khan-intervie...
- closetnerd 3y ago
  Eh? She seems like the first in a very long time to actually be making a legitimate attempt at the job. Makes her very likable.
  - megaman821 3y ago
    If she ends up losing cases to Meta, Microsoft and Amazon, how does that help? She seems to think the chilling effect of the FTC being litigious is victory, but losing every case isn't a great strategy.
    - closetnerd 3y ago
      My perspective here is that to do the job was going to be near impossible. No one even knows at this point how to succeed. And if we need to learn how to succeed, the initial heuristic of applying the law is the only starting point. Failure was the expected initial result. She can fail for the entirety of her term. We lose nothing from the status quo. But if she can stick to it - then after she's taken enough of the initial beatings, someone else can come and succeed with the learnings she provides.
sigmar 3y ago
>he “was a big fan, even at Meta, of what you did to my boss." It was an apparent reference to the agency’s suit attempting to block the company’s acquisition of Within Limited, an AI startup. Was this sarcasm? Very confused by this passage and feel like I'm missing context.
- wyxuan 3y ago
  lmao I was surprised by the passage as well. For the uninitiated, Within makes Supernatural, the VR fitness app and doesn't seem to have much to do with AI
todd-davies 3y ago
Khan is massively pro-startup and pro-innovation. Her vision of a more decentralized economy is well aligned with the hacker mindset of the Bay Area. The core of her agenda for antitrust is not about being anti-merger or anti-bigness. Rather, her project is mainly about creating the conditions for pluralistic, bottom-up and more "permissionless" markets. Markets where founders can build successful businesses without necessarily having to rely on large 'gatekeeper' firms as partners. To the extent that large firms are required, Khan's vision is that they shouldn't be able to use their economic power to bargain unfairly or exploitatively with smaller firms. Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me. (Source: I'm doing a PhD in Antitrust/Competition Law)
- wskinner 3y ago
  > Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me. Serious question: what is the "antitrust community"? Can you shed some light on the theory that making mergers more difficult would either a) make it easier for startups to grow organically or b) benefit society in general? If the upside from working at or creating a startup is due to some combination of IPO or acquisition (this is of course a simplified model), and acquisitions are made more difficult, why do you assume that IPOs would become more likely or more lucrative? Once upside is removed from the startup ecosystem, how will potential employees and founders respond at the margin? I'm struggling to see an equilibrium here that involves more rather than less money and work poured into startups.
dtaht 3y ago
I miss bump: https://en.wikipedia.org/wiki/Bump_(application) https://en.wikipedia.org/wiki/Bump_(application) I rather hate the gross over-characterizations of SV as being VC-led (or destroyed). There are plenty of old fashioned network hippies still there, very concerned about the destruction of the formerly egalitarian ideals of the internet being ignored by the current ethos, people that still work on GPL'd and open source code, living in pain or poverty due to lack of credit, respect or support from the current regimes. The internet is a vast, shared resource that we hoped would benefit all personkind if we continued to understand the benefits connectivity brings to us all. I still remember and cherish the ethos that setup multiple non-profits to be its stewards - the hundreds of IXPs, in particular, but also isoc, arin and the other RiRs, places like isc.org, the internet archive, and wikipedia - all struggling to be heard over the latest grifter-driven-fad. There is still room for entrepreneurship and innovation in SV and the world, but preferably greener and more self sustaining than it has been for the last decade.
jgalt212 3y ago
> She's a friend to entrepreneurs and founders. She needs to find her John D. Goeken / MCI, and I hope she does.
rmk 3y ago
Ooh... I suppose the same charm that drove away most of the career antitrust officials will now be turned toward SV? The time to beg political benefactors has arrived, now that 2024 is hovering close by, hence this visit. I suppose it's a great technique: turn the screws, file lawsuit after lawsuit and fail to win, and then turn around and ask for donations (the implied outcome is that the lawsuits will stop)?
ajkjk 3y ago
She really is one of things about the present that makes me the most hopeful for the future.
- ajkjk 3y ago
  IMO the end goal for solving this much-needed era of "monopolies and capitalism ruining everything" isn't the FTC winning cases in the existing framework, it's new laws that fix the new problems. Previous generations of Americans experienced how shitty monopolies are for everybody and made laws and agencies and legal precedent to prevent it. We should be aiming to do that again, for the new era of shitty monopolies ruining everything. The newly-revealed problems are not the same problems as railway companies and stuff from a hundred years ago. They may well be legal now (hence the difficulty of winning court cases), but they still suck for the country, and we can in principle legislate them out of existence. The great frustration of my (millennial) generation is that we grew up at the tail end of an era in which everyone evidently gave up on using government to make the world they wanted to live in and settled for getting rich, and we're .... slowly... trying to reclaim the fact that, no, actually, letting people exploit, manipulate, and degrade us is not something we have to put up and we are actually allowed to fix it democratically --- even if that notion had been mostly forgotten for a few decades.
theknocker 3y ago
[dead]

99 points by scyzoryk_xyz 3y ago

From the article: In her first trip to the tech hub home to giants and startups in her role, Khan had a key message for Silicon Valley across talks, dinner and events all over the Bay Area: She's a friend to entrepreneurs and founders. "I think it's really important for D.C. to begin engaging directly with the founders with startups, and getting a better sense of what are the risks you see," Khan said at startup accelerator Y Combinator on Friday.

jldugger 3y ago

Instagram had 13 employees[1] when FB bought it. IDK how you stop that kind of anticompetitive behavior without removing one of the big VC exit strategies. [1]: https://www.businessinsider.com/instagram-first-13-employees-full-list-2020-4#maykel-loomans-was-one-of-three-employees-who-joined-instagram-right-before-it-was-acquired-1 https://www.businessinsider.com/instagram-first-13-employees...

gizmo686 3y ago
Who says you cannot remove the exit strategy? A business model of selling out to the monopolist is not innovation; it is a few investors extracting protection money from the monopolist. To the extent that VC produces genuine innovation, they should be able to extract profit by either drawing dividends from the profitable company they own, or selling their share on the open market to other investors who anticipate being able to collect dividends. That we have a whole class of investors whose strategy is to sell to a few monopolistic firms seems like a clear indication that the market is not healthy.
- JumpCrisscross 3y ago
  If exit to the dominant player is prohibited, and competing against them is prohibitive, you’re not going to get new entrants. This strengthens the incumbents’ positions. Blocking M&A (of start-ups) before committing to break-ups is worse than doing nothing at all.
  - bogwog 3y ago
    > competing against them is prohibitive Can you explain this part? Do you mean it's prohibited, as in the FTC's actions/policies mean small companies are not allowed to compete? Or do you mean that it is difficult, as in small companies are not able to compete? Part of the reason big tech does so many acquisitions is to reduce the amount of competition they face from what they see as competitive threats. We might not see startups with broken/unsustainable business models anymore, but that's a good thing. If big tech can't buy out their competition, they will need to actually compete. History has shown that entrenched monopolists can't compete with smaller and more innovative companies. Consumers and the economy will benefit more from those types of companies growing into their own things rather than merging them into the existing big tech behemoths. What would the world look like today if Facebook (or any other giant) wasn't allowed to acquire Instagram? Instagram could've continued to grow, they could've acquired more funding, poached users from Facebook, etc. That could've inspired some other social media startups, and they'd be fighting it out with Instagram/Facebook too. Everybody (except maybe Facebook) wins in that situation. Alternatively, imagine where TikTok would be right now if they were an American company and Facebook actually had the opportunity to buy them out early?
- deleted 3y ago
  [deleted]
bogwog 3y ago
> without removing one of the big VC exit strategies Are you saying that's a strategy that we should try to preserve? As a user of tech, have you never been screwed when a company suddenly got acquired by a tech giant and then went to shit/got shutdown/etc? This kind of thing leads to unsustainable bullshit companies that always end up harming consumers and markets in the long run.
theptip 3y ago
It was obvious at the time that FB buying IG was anti-competitive. Anyone not operating the main social network at the time could have bought them without competition concerns, or they could still have IPO’d. Sure, by enforcing this you decrease in expectation the maximum payout for a startup, but you plausibly increase the viability of small/medium payouts and viable non-VC models like bootstrapping.
- jldugger 3y ago
  I figure the tricky part is figuring out a rule that doesn't make buying any struggling 13 person startup an FTC enforcement risk.

coding123 3y ago

What. Why do this?

lazide 3y ago
First you demonstrate the threat. Then you hold out the hat.
- justrealist 3y ago
  Except she blew all her powder on ill-conceived FTC lawsuits that failed. This is a kinda pathetic plan B.
  - lazide 3y ago
    Sure. But that doesn’t make it not what is happening!
gpm 3y ago
When you're told by executive order that you're supposed to start regulating AI, talking to the people who do AI seems like the obvious responsible first step...
Dr_Birdbrain 3y ago
My best guess is she’s hoping to “divide and conquer”.

megaman821 3y ago

Good luck with that. I was listening to an interview with her, and she seems neither likeable nor do her legal theories sound convincing. Her criterion for antitrust action is so broad, it would turn the FTC into a political cudgel. Since nearly every acquisition or merger would violate the new FTC doctrine in some part, there is no choice but selective enforcement.

thisgoesnowhere 3y ago
Link?
- hoppyhoppy2 3y ago
  Possibly https://www.npr.org/2023/11/03/1197954506/lina-khan-interview-amazon-ftc-antitrust-paradox-monopoly https://www.npr.org/2023/11/03/1197954506/lina-khan-intervie...
closetnerd 3y ago
Eh? She seems like the first in a very long time to actually be making a legitimate attempt at the job. Makes her very likable.
- megaman821 3y ago
  If she ends up losing cases to Meta, Microsoft and Amazon, how does that help? She seems to think the chilling effect of the FTC being litigious is victory, but losing every case isn't a great strategy.
  - closetnerd 3y ago
    My perspective here is that to do the job was going to be near impossible. No one even knows at this point how to succeed. And if we need to learn how to succeed, the initial heuristic of applying the law is the only starting point. Failure was the expected initial result. She can fail for the entirety of her term. We lose nothing from the status quo. But if she can stick to it - then after she's taken enough of the initial beatings, someone else can come and succeed with the learnings she provides.

sigmar 3y ago

>he “was a big fan, even at Meta, of what you did to my boss." It was an apparent reference to the agency’s suit attempting to block the company’s acquisition of Within Limited, an AI startup. Was this sarcasm? Very confused by this passage and feel like I'm missing context.

wyxuan 3y ago
lmao I was surprised by the passage as well. For the uninitiated, Within makes Supernatural, the VR fitness app and doesn't seem to have much to do with AI

todd-davies 3y ago

Khan is massively pro-startup and pro-innovation. Her vision of a more decentralized economy is well aligned with the hacker mindset of the Bay Area. The core of her agenda for antitrust is not about being anti-merger or anti-bigness. Rather, her project is mainly about creating the conditions for pluralistic, bottom-up and more "permissionless" markets. Markets where founders can build successful businesses without necessarily having to rely on large 'gatekeeper' firms as partners. To the extent that large firms are required, Khan's vision is that they shouldn't be able to use their economic power to bargain unfairly or exploitatively with smaller firms. Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me. (Source: I'm doing a PhD in Antitrust/Competition Law)

wskinner 3y ago
> Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me. Serious question: what is the "antitrust community"? Can you shed some light on the theory that making mergers more difficult would either a) make it easier for startups to grow organically or b) benefit society in general? If the upside from working at or creating a startup is due to some combination of IPO or acquisition (this is of course a simplified model), and acquisitions are made more difficult, why do you assume that IPOs would become more likely or more lucrative? Once upside is removed from the startup ecosystem, how will potential employees and founders respond at the margin? I'm struggling to see an equilibrium here that involves more rather than less money and work poured into startups.

dtaht 3y ago

I miss bump: https://en.wikipedia.org/wiki/Bump_(application) https://en.wikipedia.org/wiki/Bump_(application) I rather hate the gross over-characterizations of SV as being VC-led (or destroyed). There are plenty of old fashioned network hippies still there, very concerned about the destruction of the formerly egalitarian ideals of the internet being ignored by the current ethos, people that still work on GPL'd and open source code, living in pain or poverty due to lack of credit, respect or support from the current regimes. The internet is a vast, shared resource that we hoped would benefit all personkind if we continued to understand the benefits connectivity brings to us all. I still remember and cherish the ethos that setup multiple non-profits to be its stewards - the hundreds of IXPs, in particular, but also isoc, arin and the other RiRs, places like isc.org, the internet archive, and wikipedia - all struggling to be heard over the latest grifter-driven-fad. There is still room for entrepreneurship and innovation in SV and the world, but preferably greener and more self sustaining than it has been for the last decade.

jgalt212 3y ago

> She's a friend to entrepreneurs and founders. She needs to find her John D. Goeken / MCI, and I hope she does.

rmk 3y ago

Ooh... I suppose the same charm that drove away most of the career antitrust officials will now be turned toward SV? The time to beg political benefactors has arrived, now that 2024 is hovering close by, hence this visit. I suppose it's a great technique: turn the screws, file lawsuit after lawsuit and fail to win, and then turn around and ask for donations (the implied outcome is that the lawsuits will stop)?

ajkjk 3y ago

She really is one of things about the present that makes me the most hopeful for the future.

ajkjk 3y ago
IMO the end goal for solving this much-needed era of "monopolies and capitalism ruining everything" isn't the FTC winning cases in the existing framework, it's new laws that fix the new problems. Previous generations of Americans experienced how shitty monopolies are for everybody and made laws and agencies and legal precedent to prevent it. We should be aiming to do that again, for the new era of shitty monopolies ruining everything. The newly-revealed problems are not the same problems as railway companies and stuff from a hundred years ago. They may well be legal now (hence the difficulty of winning court cases), but they still suck for the country, and we can in principle legislate them out of existence. The great frustration of my (millennial) generation is that we grew up at the tail end of an era in which everyone evidently gave up on using government to make the world they wanted to live in and settled for getting rich, and we're .... slowly... trying to reclaim the fact that, no, actually, letting people exploit, manipulate, and degrade us is not something we have to put up and we are actually allowed to fix it democratically --- even if that notion had been mostly forgotten for a few decades.

theknocker 3y ago

[dead]