Fireside with Former FTC Chair Lina Khan

Key Takeaways

Lena, thanks so much for for being here today. Um, I feel like we have to start with Steve Bannon uh saying that he thinks you're one of the most important political thinkers in the country right now. Um, and even suggesting that he thinks you should be reinstated as as chair of the the FTC. Um, I mean, you you spoke at our inaugural event last year alongside then Senator JD Vance, who said that um you were his favorite member of the Biden administration. Um, and obviously the political landscape has shifted slightly, but you know, during the campaign you had Harris advisers like Reed Hoffman and Mark Cuban publicly advocating your removal. Um, I'm curious about your perspective on this this contrast. You seem to occupy a kind of unique political position. Um, and then more specifically, whose worldview on anti- monopolies is closer to your own, Vice President Vance or former Vice President Harris? Well, first of all, it's great to be here. Uh, it's a great question for them. Um, you know, I think it is really, uh, thrilling and and fascinating to see that in a fairly organic way, we are seeing people uh, across markets, across the political spectrum, uh, come to the recognition that, you know, it probably isn't a great idea to have our economy be centrally planned by monopolists. And that having markets where incumbents are squashing out innovators, where entrenched monopolists are pulling up the ladder behind them really hurts us. Uh it hurts us as consumers. It hurts entrepreneurs. It hurts startups. Uh it means that our markets are more stagnant and less dynamic. And you know, I think there is traditionally been a deep understanding that extreme concentrations of power pose a threat to our core liberties, be that power that's concentrated in the government in ways that is unchecked or power that is concentrated in a monopolist or a very small number of companies. And so, um, I think we've seen a lot of progress in the last few years in terms of reinvigorating our tools to take on that unchecked power. Uh but of course there's a lot more work to do. Um so Ezra Klein and Derek Thompson have a new book out that's kind of been making waves um abundance and they make the point I think their sort of their central thesis is basically that Democrats need to kind of focus on regulations and red tape um as kind of the primary obstacles to unleashing um you know affordable supplies of of things like housing. Um, I guess first of all, you know, do you agree with their premise that that government red tape should be high on the list of of problems for for Democrats specifically to focus on? And if so, sort of how does that relate to the challenge of corporate power in your mind? Yeah. So, big caveat, I have not yet read the book. I was hoping to pick it up at the airport on my way home. I think as a general matter um you know one of the biggest obstacles that I heard about at the FTC from entrepreneurs and startups was bureaucratic red tape that was created by monopolists and that was created by incumbents that were unchecked in the market. Um, you know, I had the chance to to not just speak at the event, uh, you all did the last few years, but also sit down with a lot of entrepreneurs and startups, uh, and people who were trying to get their app to market and just heard about all of this frustration they had trying to navigate these rules set by these private gatekeepers. And so I think any analysis that's trying to honestly and candidly figure out what are the obstacles to progress and where do we see those bottlenecks really does need to grapple with the role of private bottlenecks that are across markets. Uh you know I understand that the book is seems to be very focused on some problems that are specific to San Francisco and so you know I think we should be wary about extrapolating that beyond that to the whole country. But even if you're thinking about things like housing at the FTC, we saw markets that were monopolized, including in areas like cement, uh, where you had, you know, local building, uh, efforts that were really thwarted by some of those efforts to, you know, make sure materials were actually affordable. So, I think those are all challenges that we really need to grapple with. Um several people today have talked about uh the President Trump's um removal of of Commissioner Slaughter and Bedoya um from the FTC. Um obviously these are being cont being contested in court right now. Um but I'm curious about your perspective on uh the intervention and and sort of what implications it might have for the commission's autonomy going forward. Yeah, I mean these firings were clearly illegal. There's very clear law on the books that says uh FTC commissioners can only be removed for cause. there was no cause even alleged here. Um, and I think just more generally, you know, you can have an academic debate about what the law is and what the implications are for presidential power. What's been most disturbing to me is seeing already the ramifications on the work itself. Uh, just this week, we saw that one of the cases we had filed last year against the three big PBMs alleging that they had engaged in illegal tactics that are inflating the cost of insulin and other drugs. that lawsuit has now been put on pause indefinitely uh as a direct result of these firings. So, you know, I worry about what impact is going to have on the work uh we've all been seeing. The big tech CEOs in particular uh make pilgrimages to the White House, to Mara Lago. Uh these individuals and their companies are currently defendants in litigation brought by the government. So, of course, there's also a question about what it's going to mean there. Is there a higher risk of some of these companies getting sweetheart deals and and cheap settlements? So, you know, I think this is an area that we're going to have to be very vigilant about. I think more broadly, you know, we had seen we have seen significant bipartisan alignment uh when it comes to taking on unchecked corporate power, especially when it comes to technology markets. And I do worry that this really strains that and um you know hope to see uh my colleagues reinstated quickly. Do you sort of generally have any thoughts about how we can facilitate more bipartisan alignment on on these issues or sort of like what the future of this nent coalition might might look like? Yeah. Yeah, I mean to my mind the bipartisanship here stems from the fact that the problem of unchecked monopoly power is one that affects people across all walks of life across all parts of the country. Uh you know I got to do trips to places like Ames Iowa and sit down with farmers who would share how extreme consolidation across agriculture markets was making it difficult for them to keep their farm operation afloat. uh how restrictive repair policies were making it difficult for them to repair their own equipment in a timely way. Uh would meet with people in Silicon Valley hearing very similar concerns about private gatekeepers there. And so I think the more that we engage with the facts and what's actually happening in markets, I think that creates a real organic way to recognize that people again across the country, across political affiliations are increasingly recognizing how extreme concentration of power in markets uh poses a real threat. So after the launch of Deepseek R1, you wrote an oped in the New York Times um and you you said quote, "Deepsek is the canary in the coal mine. It's a it's warning us that when there isn't enough competition, our tech industry goes grows vulnerable to its Chinese rivals threatening US geopolitical power in the 21st century. And you joined us at YC last July to talk about the importance of open source uh foundation models. And this was when SP 1047 was being debated uh Senator Scott Weiner's um AI safety bill. I'm curious sort of given your perspective on open source AI um you know how do you view the role that that dominant gatekeepers like Apple and Google um might be playing in shaping consumer access to to AI technology. I I think it's troubling and if history is any guide then we should worry that these gatekeepers and the self-interest that they have could mean that people are going to be deprived of cutting edge AI technologies and tools that could really improve people's lives but that may not be aligned with the interests of the gatekeepers. uh you know I saw I I um thought that the testimony that Gary Tan gave yesterday and some of the examples he gave around Siri uh were quite compelling around you know why why do we see such a lag here in terms of the technological sophistication and so um I think it's a it's a real concern and and when I was at the FTC we made an effort uh to make sure we were really promoting uh open APIs uh focusing on things like open weights uh in models and recognizing the ways that historically ly openness has been such an important catalyst for turbocharging innovation and making sure that entrepreneurs um are able to really focus on innovating in the areas where they have the most value to add rather than kind of making the infrastructure be a basic obstacle and entry barrier. So I hope that those are principles that we can kind of continue to to pursue in the AI space as well. Yeah, I guess it's it's sort of interesting. Some people have um pointed out the kind of apparent contradiction of a country like China being at the forefront in many ways of of open source um AI while the US uh you know obviously we have many sort of closed source um models. What do you make of that kind of apparent you know contradiction or or difference just sort of between the two the two models? Yeah, I mean it's certainly interesting and and look, I think we need to double down on the historical approach that America has taken which has been to make sure that we are uh keeping our markets open and competitive rather than opting for a centrally planned economy that really uh doesn't necessarily reward good ideas and allow the best ideas to rise to the top. Um, you know, uh, Frederick Hayek wrote this famous essay about the comparative advantages that a free market system has over a centrally planned economy. And he noted, for example, that, um, the pricing system is one that allows dispersed information and dispersed knowledge to be communicated in ways that in a centrally planned system, you're never going to be able to replicate because no one entity kind of knows everything. And one of my concerns is that when you have these beoths, these like huge entities that are just spanning all of these markets, you really actually see the breakdown of some of these basic free market tenants, uh, where basic information that would be communicated effectively and efficiently in a free market system just totally gets distorted. And so I I worry a lot about this those distortions. Uh we obviously have a whole set of antitrust cases that are currently pending uh including one against uh Facebook at the FTC that is set to go to trial in the coming weeks. Um you know it'll be really important that we see these litigations through that we get good remedies. One thing that I continue to worry about is the way that the glacial pace of antitrust litigation can mean that the remedy um you know really needs to be forwardlooking so that we are not just fixing the problems of yesterday but actually making sure uh that the problems are not being replicated in these new markets. And so I think that's going to be uh a really important principle. It's a principle that kind of exists in the law and we've seen that some of the most effective antitrust remedies in the past have really been futurep proofed in that way. Um, but I think it's going to be really important for government agencies to be making that case to the court and then for judges um to really make sure that we're not effectively allowing the monopolist to benefit and profit from years of lawbreaking and then just pay a fine, you know, a decade later or even, you know, make certain changes to their business that are just affecting old markets even as they're just replicating those strategy in places like AI. So, I think that's going to be an area to stay very focused on. Um, I want to actually see if there's any, you know, questions from the audience. I think no one no one has yet done this. Um, but if we have like, you know, one or two, uh, questions from the crowd, I think it might be interesting to incorporate those. Um, I guess I'll just I see a hand in the back. Yeah. Sorry, could you say that again? Uh I've not seen that announcement. Uh it'll make for an interesting uh challenge and and question for uh antitress agencies. Yeah. Thank you so much for sharing. Maybe this isn't entirely your space, but I think this matters a lot. that today is going to determine whether smallies. You mean in the context of AI or just generally? Yeah, I mean this is a uh literally a trillion dollar question right now in terms of uh you know what some of these uh larger firms that have been able to build their models are able to do. Um, you know, when I was at the FTC, we heard a lot from, uh, people who create for a living, be it authors, be it graphic designers, uh, who were really alarmed that, you know, one day they woke up and saw that their life's creation had just been ingested by these models and they seemed to have no recourse and suddenly these models were spitting out, you know, sometimes text, sometimes images that were competing with their own products and had been fed by their own products. And so I do think that there is a basic question of fairness here. Um this is also an issue that's being litigated in the courts. There are kind of few very prominent uh cases including one brought by the New York Times. Um there was actually just a uh recent decision I believe in the third circuit. Um uh basically allowing uh one of these copyright cases to proceed. And so it's a very timely question. I do think that just at a basic level of of not just fairness but innovation, if we allow an ecosystem to appropriate value from creators without actually adequately compensating them or really getting their consent, I worry that that is going to dampen innovation in the long term because what are going to be the incentives to actually create in the first place if you're not going to be able to reap the rewards when those creations and those investments actually take off. And so I do worry that beyond the kind of basic fairness implications, there are going to be major questions here about whether creators are even going to have the incentive to invest in creations and whether we're going to see um stagnation in that area if we don't get the market questions right. Hi, I'm Daniela Chzlo with Politico. Um and I was hoping you could respond to two news developments out today. One is a report in the Financial Times that the EU might limit the fines that it imposes on Meta um and Apple. And the second one was reports that Mark Zuckerberg was in the White House today um days before his FTC case goes to the court again. What do you make of those two developments? Yeah, I mean on the first I'll defer to um folks in Europe to kind of weigh in on on what the intricacies are there. Um, on the second, I mean, I do think that it's fairly troubling to see a executive that's a, you know, heading up a company that's a defendant in a major lawsuit, um, be able to have such easy access. And I think it just does raise questions about, uh, are there going to be certain benefits or value that is conferred as a result of that access. Um, you know, this is kind of the the kind of iconic concern that the founders had about why you need to create checks and balances. And one of the reasons we have our anti- monopoly laws was to make sure we were safeguarding our government and safeguarding our political system from outsized economic power that could then be used for political ends. And so I think we are all watching those risks and threats in real time. and it's going to be a major test of the system to see if we can withstand that. Kind of closing out this conversation, um are you gonna primary Chuck Schumer? What what is next for you uh now that now that uh you know now that you are you know for now in the private sector? Uh no, I I admire people who do electoral politics, but it's not something that I personally have a deep desire to to do. Um, you know, I think there's a lot of, uh, energy and enthusiasm, especially among young people, uh, to figure out, you know, what is the next phase of all of this look like and what does it mean to keep building out this anti- monopoly movement? And so, uh, that's what I'm going to be focused on. Do you have a final message to the kind of the founders in the audience who are sort of wondering, you know, what what this stuff sort of means for them, um, the builders? Yeah, I mean, I know DC can sometimes seem like this foreign land or even a different planet. Um, I'll just say your engagement really matters. Um, you know, when I had the privilege of of being FTC chair, really prioritized uh hearing from real market participants and was always uh struck by just how much you learn uh from people on the ground who are kind of dealing with these market realities day in day out and it makes it so that our work is more effective and more directly responsive to the actual challenges out there. And so I would just encourage people to uh keep engaging uh with with policy makers, with elected officials um because it's it's incredibly important. Great. Thank you so much for your time, Lena. Thanks so much. Thank you.