[HN Gopher] FTC Chair Lina Khan looks for allies and leads in Si...
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FTC Chair Lina Khan looks for allies and leads in Silicon Valley
charm offensive
Author : scyzoryk_xyz
Score : 26 points
Date : 2023-11-04 19:24 UTC (3 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| scyzoryk_xyz wrote:
| 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 wrote:
| 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...
| gizmo686 wrote:
| 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.
| bogwog wrote:
| > 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 wrote:
| 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.
| coding123 wrote:
| What. Why do this?
| lazide wrote:
| First you demonstrate the threat. Then you hold out the hat.
| justrealist wrote:
| Except she blew all her powder on ill-conceived FTC lawsuits
| that failed.
|
| This is a kinda pathetic plan B.
| gpm wrote:
| 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 wrote:
| My best guess is she's hoping to "divide and conquer".
| megaman821 wrote:
| 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 wrote:
| Link?
| hoppyhoppy2 wrote:
| Possibly https://www.npr.org/2023/11/03/1197954506/lina-khan-
| intervie...
| closetnerd wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| >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.
| todd-davies wrote:
| 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 wrote:
| > 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.
| catlover76 wrote:
| > Serious question: what is the "antitrust community"?
|
| Not the poster, but I would assume it refers to the people
| who follow developments in antitrust law and the enforcement
| thereof (so antitrust lawyers, basically).
| todd-davies wrote:
| The "antitrust community" is people working in antitrust
| law/policy/academia who write, tweet, speak at conferences,
| etc. Two caveats are that a) this is my view based on
| personal observations, and b) that a consensus doesn't mean
| that everybody agrees. Undisputedly however, there is a lot
| of academic work these days which comes to the conclusion
| that merger review should be strengthened. For instance, see
| [1].
|
| Khan's aim isn't necessarily to make mergers more difficult,
| or to prevent them per se. Rather, it's to make a more
| concerted effort to prevent mergers which on balance, appear
| not to be in the public interest. There are several reasons
| why a merger might be harmful.
|
| First, some mergers are "killer acquisitions" whereby a large
| firm will acquire a "nascent" competitor and then discontinue
| its product (e.g. [2]). One danger here is that killer
| acquisitions nip start-up competition in the bud, such that
| new firms don't have a chance to grow and compete against
| incumbent firms. That's a problem because competition means
| that consumers, rather than incumbent firms, ultimately get
| to choose market outcomes. If there is no choice, then
| consumers can't choose. The ultimate failure mode here is
| some kind of command economy where monopoly firms get to make
| most of the decisions about how markets work and consumers
| get little say at all.
|
| Second, mergers lead to market concentration because you're
| taking a market with n firms and moving to a market with n-1
| firms. Market concentration isn't inherently bad, indeed,
| some markets are 'naturally' concentrated. That said
| unconcentrated markets are generally preferred to
| concentrated ones because concentrated markets can lead to
| things like tacit collusion (which has similar outcomes to a
| cartel) [3].
|
| Third, if there is a real possibility for startups to grow
| organically and challenge large incumbent firms for the
| market, then theory goes that VC funding could be stimulated
| on the promise of a potentially huge return. For instance, a
| VC might be willing to fund a firm if there's a 5% chance
| that it will be the next Google, but not if there's a 10%
| chance that it gets acquired in a year or two.
|
| You make a good point regarding acquisitions, IPOs and the
| personal incentives to work at a startup. I'm not assuming
| that IPO's would become more likely or lucrative; I don't
| have a view on that (except perhaps what I said in the
| previous paragraph). I guess if a firm was going to be
| successful, and a merger wasn't an option then it would
| eventually IPO instead, no? That might lead to delayed
| compensation, but it shouldn't affect the viability of a
| solid business. Fewer acquisitions might end up with some
| firms failing before IPO which would have otherwise been
| acquired. That's bad from the perspective of those at the
| firm, but isn't inherently bad from a social perspective.
| After all competition necessarily entails winners and losers.
| If all else fails, there is a 'failing firm defence' which
| would allow an acquisition if the only other option is the
| firm going out of business [4].
|
| Finally, the lack of enforcement over the past few decades
| hasn't given regulators much opportunity to "learn" what is a
| good/bad merger. A more active merger review policy would
| entail regulators building up expertise and fine-tuning their
| approach. It's important to remember that merger control
| isn't necessarily adversarial. At its best, it's a positive-
| sum dialogue between firms who want to do business and
| regulators who are trying to provide public-minded oversight.
|
| [1] Kwoka, John. "The structural presumption and the safe
| harbor in merger review: False positives or unwarranted
| concerns." Antitrust LJ 81 (2016): 837. https://heinonline.or
| g/HOL/Page?handle=hein.journals/antil81... [2]
| https://news.ycombinator.com/item?id=38145568 [3]
| https://www.tutor2u.net/economics/reference/oligopoly-
| tacit-... [4]
| https://www.concurrences.com/en/dictionary/Failing-firm-
| defe...
| IG_Semmelweiss wrote:
| Lina Khan's vision is one of contempt of the law and disregard
| of due process. A society where rules are made up on the fly
| based on whats popular and where the political wind blows [1]
|
| Lina Khan's direct actions of regulation-by-the-hip , and
| continued losses in the courtroom, will weaken actual
| anticompetitive powers, and ultimately favor monopoly
| generation by big entrenched players [1]
|
| I dont want the govt to make up rules on the fly. Even if its
| going after monopolistic companies. Because I know its only a
| matter of time until the govt uses the same pretext to come
| after me, too.
|
| [1] https://archive.vn/aXD6T
| janalsncm wrote:
| > A society where rules are made up on the fly based on whats
| popular and where the political wind blows
|
| Sorry, where do you think laws come from? They're not written
| on stone tablets at the top of a mountain. They're written by
| people for people. If you prefer Robert Bork's hands off
| approach to markets that's your prerogative but we can't
| separate laws and regulations from their consequences.
| There's no question in my mind that Amazon's market share
| allows them to push their weight around in ways that raise
| prices for consumers as well as stifle competition and make
| workers' lives worse.
| IG_Semmelweiss wrote:
| You just clarified your position on the issue of slavery in
| 1776
| wskinner wrote:
| In the United States, laws come from Congress.
| sashank_1509 wrote:
| She made her career or reinventing the definition of monopoly
| to include Amazon and big tech companies to date. At worst
| she's a cynical, corrupt government apparatchik who uses the
| massive hammer of the government to bully productive industries
| and enrich herself with fame and money. At best she is an
| ignorant, foolish government apparatchik who squeezes the goose
| laying golden eggs to death and then wonders how she managed to
| make the worlds most innovative place completely barren of
| innovation, vitality thus dooming her society. She almost makes
| me want to vote republican, and that's saying something as I've
| never voted republican my entire life.
| andsoitis wrote:
| > She made her career or reinventing the definition of
| monopoly to include Amazon and big tech companies to date.
|
| Is this what you're referring to?
| https://www.npr.org/2021/07/01/1011907383/new-ftc-chair-
| lina...
| Conscat wrote:
| If she did actually redefine monopoly in that way, without
| more detail it at least sounds like a useful redefinition.
| patmorgan23 wrote:
| No she made her career by stating the obvious that maybe it
| wasn't a good idea for the FTC to forgo anti-trust
| enforcement for 40 years.
|
| Oh no the trillion dollar tech giants have to undergo some
| scrutiny, how ever will they continue to pay their executives
| and shareholders millions.
| catlover76 wrote:
| Massively idiotic take. She isn't enriching herself by
| pursuing this agenda, which she began developing as a law
| student. On the contrary, had she gone into biglaw to work on
| antitrust defense for companies like Amazon and Apple, that
| would be a path to cynical self-enrichment.
|
| We have no evidence that the implementation of her policies
| or whatever she is pursuing has or will "make the worlds most
| innovative place completely barren of innovation, vitality
| thus dooming her society" (what a bloviating fucking diva you
| are).
|
| She also isn't the only one who thinks the market dominance
| of these big tech firms has been an impediment to innovation
| and disruption because smaller startups can't compete, get
| bought and squashed early, etc.
| IG_Semmelweiss wrote:
| Killing random mergers for no reason, is killing the only exit
| left for many companies (the IPO door is closed now).
|
| That is massively anti-startup in my book.
| duped wrote:
| What are your thoughts on increased scrutiny on M&A for the Big
| Tech Companies affecting the liquidity of startup equity?
|
| Meaning, if Big Tech can't buy startups because Big Brother
| doesn't let them, then how does that impact VC which is based
| on the principle of there eventually being some liquidity for
| their investments (which increasingly, are not IPOs).
| dtaht wrote:
| I miss bump: 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.
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