Lina Khan vs Jeff Bezos This Is Big Techs Real

Lina Khan vs. Jeff Bezos: This Is Big Tech’s Real Cage Match

Jeff Bezos made his fortune with a really big idea: What if a retailer did everything it could to make customers happy?

His vigorously promoted creation, Amazon, sold as many items as possible as cheaply as possible and delivered them as quickly as possible. The result is that $40 out of every $100 spent online in the US goes to Amazon and Mr Bezos is worth $150 billion.

Lina Khan made a name for herself with a completely different idea: What if satisfying the customer wasn’t enough?

Low prices, she argued in a 95-page investigation of Amazon in the Yale Law Journal, can mask behaviors that stifle competition and undermine society. Published in 2017 while she was still a law student, it is already one of the most consequential academic works of modern times.

These two very different philosophies, each driven by an outsider unafraid to take risks, finally have their much-anticipated confrontation. The Federal Trade Commission, now led by Ms. Khan after evolving from political wonk to political actor, filed suit against Amazon in federal court in Seattle on Tuesday. The lawsuit accused Amazon of being a monopolist that used unfair and illegal tactics to maintain its power. Amazon said the lawsuit was “wrong as to the facts and the law.”

Mr. Bezos, 59, is no longer in charge of Amazon on a daily basis. Two years ago, he handed over the reins of CEO to Andy Jassy. But make no mistake: Mr. Bezos is the CEO of Amazon and owns more shares of the company than anyone else. It is his innovations over more than 20 years that challenge Ms. Khan. He is quoted repeatedly in the FTC complaint.

Over the summer, Silicon Valley was transfixed by the prospect of Elon Musk and Mark Zuckerberg literally fighting each other, even though the chances of that actually happening were almost zero. But Ms. Khan and Mr. Bezos are the reality — a court battle that could have implications far beyond Amazon’s 1.5 million employees, 300 million customers and $1.3 trillion worth.

If Ms. Khan’s arguments hold up, the competitive landscape for tech companies will look very different in the future. Large antitrust cases tend to have this effect. Twenty-five years ago, the government won only an ambiguous victory in its prosecution of Microsoft. Still, it still had enough power to distract and weaken a feared software empire, allowing 1,000 startups to flourish, including Amazon.

It is largely thanks to Ms Khan, 34, that it is even conceivable to force major changes on the retailer. After spending a few days interviewing her and those around her for a profile in 2018, I thought she understood Mr. Bezos because she was so similar to him. Very few people can see opportunities that others don’t see and successfully work toward them for years, encouraging others to join them. But these were qualities they both shared.

“How do changes in history happen?” asked Stacy Mitchell, an early Khan ally who is co-executive director at the Institute for Local Self-Reliance, a research and advocacy group that promotes local power to combat corporations. “Lina captured the imagination in a way that allowed the reform movement to engage a broader range of people.”

Ms. Khan and Mr. Bezos were similar even in their silence. For years, every article about Amazon included the line “Amazon refused to comment,” another form of control. Ms. Khan has never voluntarily disclosed personal information to me, even if it was irrelevant.

Amazon and the FTC declined to comment for this article.

The unlikely saga of Mr. Bezos has long since entered the realm of myth. He spent his childhood summers on his grandfather’s ranch in West Texas, wanting to be a theoretical physicist but becoming a Wall Street analyst instead. He had no retail background. He was interested in ideas, not things.

Amazon wasn’t the first online store – it wasn’t even the first online bookstore. It spent a lot of money pointlessly and mercilessly drove away many employees. The entire company almost failed in the dot-com crash in the early 2000s. But the media was fascinated by it, customers liked it, and that gave Mr. Bezos leeway.

A former Amazon engineer once memorably described Mr. Bezos as someone who “makes normal control freaks look like stoned hippies.” A company that posts “attendance reminder” signs in bathroom stalls and tells warehouse workers that they will be “under review for termination” if they screw up their timekeeping is a company with overwhelming ambition.

Reformers are like entrepreneurs: they too fight against reality and try to make room for their vision of how things could be better. Ms. Khan’s journey to confronting Amazon in federal court is in some ways an even less likely story than that of Mr. Bezos. And so, like Mr. Bezos in the early years of Amazon, she has become a fascinating figure.

The daughter of Pakistani immigrants from London, Ms. Khan had the natural instincts of a good journalist. At Williams College, where she worked on the school newspaper, a friend described being particularly interested in understanding power, particularly the ways in which it hides itself to gain more power. She was in her late 20s when she wrote her Amazon article – about Mr. Bezos’s age when he quit his job on Wall Street to drive west to Seattle and his destiny with his then-wife MacKenzie Scott.

Antitrust law was the traditional instrument for containing companies that had become too powerful. Antitrust law played an important role in the 1890s, the beginning of the Progressive Era, and again in the 1930s as part of the New Deal. But in the early 1980s, antitrust law was at a low point. The so-called consumer welfare standard reduced antitrust law to one question: the price customers paid. If the prices were low, there was no problem.

The Microsoft case was important and influential, but it was a major aberration. In the early years of this century, the prevailing laissez-faire philosophy enabled not only Amazon but also other startups to rise much more quickly than would otherwise have been the case. Facebook and Google didn’t charge users and were allowed to fight their way to dominance. Six of the eight most valuable U.S. companies are technology companies – seven if you consider Tesla a technology company.

The government was slow; Silicon Valley was fast. The market would decide the fate of corporate empires. When Ms. Khan began studying law in 2015, hardly anyone was interested in promoting competition through government intervention. Criminal justice reform, environmental law, immigration – these were the topics that excited the students. She chose antitrust law practically alone.

Anyone who has a radical idea in Washington faces so many obstacles that it’s no surprise that it happens so rarely. When Ms. Khan was named chair of the FTC in 2021, Amazon complained that she was biased.

“She has argued on numerous occasions that Amazon is guilty of antitrust violations and should be broken up,” the company wrote in a 25-page petition seeking to bar Ms. Khan from any judgment on them.

The logic: If you are critical of a company, you as a regulator cannot go near it. Ms. Khan survived that challenge, but it was only the first. Confronting the “live and let live” attitude of many bureaucrats requires unwavering determination.

Another hurdle is hostile media. Dozens of Wall Street Journal editorials, opinion pieces and letters to the editor have criticized Ms. Khan over the past two years. They called on Congress to investigate her, argued that she didn’t understand that monopolies were actually good, and accused her of letting people die by blocking a pharmaceutical company merger.

Then there is the lobbying. Amazon spent $10 million in the first half of this year, five times more than in 2013. In 2022, it donated money to hundreds of trade associations and nonprofits, some of which issue pro-Amazon reports without disclosing their funding. As part of the “know your enemy” philosophy, Amazon has also worked with Ms. Khan’s former FTC colleagues.

Going to court brings little relief. Convinced by decades of consumer welfare standards, the judges do not particularly agree with Ms Khan’s arguments. Cases against Meta, Facebook’s parent company, and more recently Microsoft have stalled. The Amazon case contains aspects of the consumer welfare standard that could make it more palatable in court.

It’s a tremendous amount of resistance. Even some of her ideological opponents are impressed that Ms. Khan still has such influence. With sheer power of mind, she opens a conversation about how companies can behave.

“Five years ago, if you questioned the consumer protection standard, you would have been laughed at,” said Konstantin Medvedovsky, a former antitrust lawyer who is now a hedge fund analyst. “Now serious people are making this argument at major conferences and are being taken seriously. This is Lina’s triumph.”

Mr. Medvedovsky doesn’t have much sympathy for Ms. Khan’s enforcement agenda. He was among the critics who derided the reform movement as “hipster” antitrust law. Still, he said, “It’s hard not to be a little in awe.”

Audio produced by Parin Behrooz.