Young firebrand rides wave of anti-corporate sentiment to become top regulator
By: David Bland
The Federal Trade Commission (FTC) is under new leadership. On June 15, 32-year-old Lina Khan was confirmed by the U.S. Senate in a 69-to-28 vote following her nomination by President Joe Biden in March. The Columbia Law School professor is the youngest person to ever lead the Commission and is already making waves as she prepares an agenda to reshape the priorities of the FTC and reclaim powers that the agency relinquished four decades ago.
Prior to Khan’s confirmation, Acting Chair Rebecca Kelly Slaughter and Commissioner Rohit Chopra, together in a series of statements, made it clear that they believed the Commission should reassess all of the powers at its disposal through the FTC Act. These powers include, most notably, the ability to use punitive monetary penalties against its targets—of whom direct sellers are on the shortlist.
Now that Khan is fully confirmed as the agency’s leader, direct selling advocates and executives are watching closely for indications of what strategies and changes she will employ in the months ahead.
Who is this progressive millennial taking the helm of the battered agency just weeks after the Supreme Court stripped it of an important enforcement power? What experiences shaped her viewpoints, and what previous missions are informing her current goals and ambitions?
Antitrust Views Are the Foundation of Khan’s Ideology
Born in London, Lina Khan immigrated to the U.S. with her Pakistani parents when she was 11 years old. She graduated from Williams College in 2010 after writing her thesis on Hannah Arendt, the influential German-American political theorist who wrote about the origins and nature of totalitarianism and embraced civic engagement and collective deliberation.
Khan then went to work in the antitrust program of the center-left New America Foundation, a public policy think tank that focused on a range of policy issues, including economic, technology and national security matters. There until 2014, she researched and wrote about monopolies before her acceptance to Yale Law School, where she graduated with a J.D. in 2017. After graduation, Khan became legal director at the Open Markets Institute, a group that spun off from her previous employer, the New America Foundation, due to Khan’s and others’ criticism of one of the Foundation’s major funders—Google.
However, while still in law school, Khan published an article in the Yale Law Journal, titled “Amazon’s Antitrust Paradox,” that propelled her into the national spotlight for its explosive impact within the legal and business communities. In the article, Khan wrote that current antitrust laws are not equipped to keep internet-platform-based business models like Amazon in check, and that a recalibration of these laws is needed to address the growth-over-profits strategy of the marketing behemoth that has resulted in predatory, below-cost pricing designed to put competitors out of business.
At the heart of Khan’s argument against Amazon is a belief that the trigger for antitrust government enforcement should no longer be based solely on consumer welfare rights—the de facto position of the FTC dating back decades throughout both Republican and Democrat administrations.
In other words, Khan argues that even if consumers are happy with an online mega-business such as Amazon (because of low prices, fast service, etc.) the business should not remain invisible to antitrust enforcement, as its alleged anti-competitive practices could harm competitors and suppliers. This is combined with a lagging harm to consumers once prices are raised again after the competitor is vanquished—a tactic that Khan accuses Amazon of practicing.
In an interview with Slate, Matt Stoller, a research director at the American Economic Liberties Project, says of Khan: “That paper came out in 2017, and it was huge. You see a lot of skepticism around Big Tech right now, and it’s largely because of the movement Lina Khan has been leading. That’s what’s so important about her: She’s reoriented the intellectual and political foundations of antitrust, and of how we do business in America.”
Khan–Chopra Alliance: A Bad Omen for Direct Sellers?
While it is now clear through her writings and statements that Chairwoman Khan intends to work towards a fundamental disruption of Big Tech business practices, direct sellers do not yet have a direct statement about the channel from Khan to indicate her predispositions toward network marketing companies and what her ultimate goals may be for similarly disrupting the social selling model.
However, the most important predictor of the Chairwoman’s future actions against direct selling may be her intellectual alignment with fellow commissioner Rohit Chopra. Commissioner Chopra has been far and away the FTC’s most vocal critic of multi-level-marketers and has vigorously implored his fellow commissioners to consider utilizing the FTC’s penalty offense authority to assess punitive financial judgements across entire business sectors, including direct selling, that the commission determines is engaging in unfair or deceptive conduct.
In July 2018, fresh off of his confirmation as commissioner, Chopra brought Khan into the FTC as a temporary advisor and Legal Fellow to assist and counsel on policy, just as matters of competition, privacy, and data usage began to surface as priorities for the agency. In March 2020, Chopra and Khan co-authored an article in the University of Chicago Law Review titled, “The Case for ‘Unfair Methods of Competition’ Rulemaking.”
As Chairwoman, Khan now stands to not only take the mantle of network marketing confrontation from her colleague and former boss, but to be the dominant voice of the agency until her term expires in September 2024. In the words of former FTC Commissioner Joshua D. Wright in a July 13 Op Ed to The Wall Street Journal, “With the announcement of a global gag order on FTC staff, Ms. Khan has made it clear that the FTC will now speak with one voice—hers.”
Current Conditions Put Wind at Khan’s Back
Despite her unabashed anti-corporate opinions and two Republican Commissioners opposing her recent decisions from the minority side of the table, Khan may be given a wider-than-expected berth by Congress if and when the FTC Commissioners request legislative support.
Notwithstanding the current hyper-partisan climate in the U.S. House and Senate, Democrat Khan received 22 Republican votes to secure her nomination to the Commission. Staunch Republican Sens. Ron Johnson and Josh Hawley, among others, have joined progressive Senators including Elizabeth Warren in publically supporting Chairwoman Khan’s antitrust agenda.
With FTC rulemaking now squarely in Khan’s focus, and a recent surge of anti-MLM sentiment brewing across social media, the direct selling channel will watch closely in the weeks and months ahead to see how far this bipartisan appetite for disruptive regulation encroaches into their business model.
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