Earth to Lina Khan
I went into reading Lina Khan’s op-ed in The New York Times this week knowing I was unlikely to agree with it. While I don’t think everything she did during her time in charge of the FTC was bad, it was clear going into her term that her stances on tech would border on zealotry. She did not disappoint in this regard, trying to block everything from Amazon buying a robot vacuum company (which worked) to Meta buying a VR fitness company (which did not). At least our carpets are now secure. Phew, that was a close one.
Anyway, from the title on down, Stop Worshiping the American Tech Giants, it was pretty clear where Khan would take this post. But actually, upon reading it, it’s not so much that I disagree as much as I’m just confused. The post is so divorced from reality at points that it’s hard to imagine that this is a serious person. It's really amazing – nearly every word of what she just said, was wrong.
Let’s break it down. All of it...
When the Chinese artificial intelligence firm DeepSeek shocked Silicon Valley and Wall Street with its powerful new A.I. model, Marc Andreessen, the Silicon Valley investor, went so far as to describe it as “A.I.’s Sputnik moment.” Presumably, Mr. Andreessen wasn’t calling on the federal government to start a massive new program like NASA, which was our response to the Soviet Union’s Sputnik satellite launch; he wants the U.S. government to flood private industry with capital, to ensure that America remains technologically and economically dominant.
First and foremost, Andreessen wasn’t actually the first to say this. Yes, he got the vast majority of the press coverage around the metaphor, but it was actually Chris Lehane, OpenAI's head of global policy who apparently used the analogy a couple weeks prior. It’s sort of a minor point — Andreessen did still say it too — but if it’s going to kick off your entire op-ed, it feels a bit cherry-picky.
Moreover, while she matter-of-factly states what she thinks Andreessen wants, the reality is that a lot of tech, including the many affiliates of Big and Little Tech (Andreessen straddles both as a board member of Meta and purveyor of "Little Tech" talking points), do actually want a more centralized government effort around AI infrastructure. That includes the power grid, of course, where government help would be needed.
As an antitrust enforcer, I see a different metaphor. DeepSeek is the canary in the coal mine. It’s warning us that when there isn’t enough competition, our tech industry grows vulnerable to its Chinese rivals, threatening U.S. geopolitical power in the 21st century.
Yeah I mean everyone also saw and used this same general metaphor. This is not an original thought. But what on Earth does this have to do with competition? If anything, most would argue that the AI market right now is too competitive. And yes, that includes within Big Tech, where the giants risk spending themselves into the bad graces of Wall Street. That sounds an awful like… the free market at work?
Although it’s unclear precisely how much more efficient DeepSeek’s models are than, say, ChatGPT, its innovations are real and undermine a core argument that America’s dominant technology firms have been pushing — namely, that they are developing the best artificial intelligence technology the world has to offer, and that technological advances can be achieved only with enormous investment — in computing power, energy generation and cutting-edge chips. For years now, these companies have been arguing that the government must protect them from competition to ensure that America stays ahead.
Let’s just say that not a lot is fully clear about DeepSeek’s models. Like, say, what they’re censoring. Or how much was built off the back of America’s own technology. Or how much was actually spent to make the model using which chips which may or may not be kosher in the eyes of the law. Khan cares little about such things. Go China!
I agree that DeepSeek has caused many — again, notably Wall Street — to question the narrative that “bigger is better” with regard to AI. But such questions were always going to happen. I mean, I wrote about this scenario almost a year ago. This was inevitable. The surprise is how a Chinese company arrived at such a place — and it sure feels like it was actually the US sanctions which forced the innovation to happen here. That’s super interesting. But that’s not Khan’s takeaway.
But let’s not forget that America’s tech giants are awash in cash, computing power and data capacity. They are headquartered in the world’s strongest economy and enjoy the advantages conferred by the rule of law and a free enterprise system. And yet, despite all those advantages — as well as a U.S. government ban on the sales of cutting-edge chips and chip-making equipment to Chinese firms — America’s tech giants have seemingly been challenged on the cheap.
What exactly is stopping any American company from “challenging on the cheap”? The answer is nothing. And, in fact, it’s starting to happen. There was always going to be a first-mover here and it happened to be a Chinese company likely because of rules that the government — and specifically the administration Khan served under — put in place. What is stopping low-end competition here in the American market? Again, nothing.
It should be no surprise that our big tech firms are at risk of being surpassed in A.I. innovation by foreign competitors. After companies like Google, Apple and Amazon helped transform the American economy in the 2000s, they maintained their dominance primarily through buying out rivals and building anticompetitive moats around their businesses.
What does this have to do with AI? I mean, maybe you could argue that the “hackquisitions” shouldn’t have been allowed to happen — and that may be a compelling argument — but certainly any “real” AI acquisition wasn’t allowed to happen under the watch of Khan so we’re arguing into the wind here.
Over the last decade, big tech chief executives have seemed more adept at reinventing themselves to suit the politics of the moment — resistance sympathizers, social justice warriors, MAGA enthusiasts — than on pioneering new pathbreaking innovations and breakthrough technologies.
What does this have to do with anything to forward her argument? It’s just an attempt at a zinger thrown in around a current anti-tech theme. I don’t disagree with it — clearly — it just doesn’t have anything to do with her actual point.
There have been times when Washington has embraced the argument that certain businesses deserve to be treated as national champions and, as such, to become monopolies with the expectation that they will represent America’s national interests. Those times serve as a cautionary tale.
Boeing was one such star — the aircraft manufacturer’s reputation was so sterling that a former White House adviser during the Clinton administration referred to it as a “de facto national champion,” so important that “you can be an out-and-out advocate for it” in government. This superstar status was such that it likely helped Boeing gain the regulatory green light to absorb its remaining U.S. rival, McDonnell Douglas. That 1997 merger played a significant role in damaging Boeing’s culture, leaving it plagued with a host of problems, including safety concerns.
I mean, maybe if Boeing wouldn’t have been allowed to buy McDonnell Douglas they’d be fine now. Maybe. That's also very easy to say in hindsight in this particular situation, which is pretty extreme. I’m just going to guess that it’s a far more complex issue (competition with Airbus, McDonnell Douglas struggling at commercial aviation, etc) than the way she’s framing it here.
On the other hand, the government’s decision to enforce antitrust laws against what is now AT&T Inc., IBM and Microsoft in the 1970s through the 1990s helped create the market conditions that gave rise to Silicon Valley’s dynamism and America’s subsequent technological lead. America’s bipartisan commitment to maintaining open and competitive markets from the 1930s to the 1980s — a commitment that many European countries and Japan did not share — was critical for generating the broad-based economic growth and technological edge that catapulted the United States to the top of the world order.
I’ve argued this before, but that’s simply not true about Microsoft. At best, maybe the antitrust case distracted them a bit, but the disruption of Windows was always going to happen because of the internet itself. Internet Explorer was one thing, but what Microsoft failed to see and create was Google. IBM and AT&T were even longer ago and yes, also undoubtedly more nuanced than she frames here in one grouping all these together in one pithy paragraph. But I do like the notion that if AT&T had not been broken up that the US would be Europe right now. Pass the wine and cheese please. (Though hold Khan’s whine.)
While monopolies may offer periodic advances, breakthrough innovations have historically come from disruptive outsiders, in part because huge behemoths rarely want to advance technologies that could displace or cannibalize their own businesses. Mired in red tape and bureaucratic inertia, those companies usually aren’t set up to deliver the seismic efficiencies that hungry start-ups can generate.
Yes, yes, we’ve all read The Innovator’s Dilemma! And guess what? The market is what leads to such situations, not regulation! Though I guess she’s arguing for more distracting bureaucracy here to speed up such disruption? Okay, I guess that’s a stance? But it’s not one the current administration is going to take kindly to. This is like DOGE bait.
The recent history of artificial intelligence demonstrates this pattern. Google developed the groundbreaking Transformer architecture that underlies today’s A.I. revolution in 2017, but the technology was largely underutilized until researchers left to join or to found new companies. It took these independent firms, not the tech giant, to realize the technology’s transformative potential.
Jesus Christ, THIS IS THE MARKET WORKING. Google had it and couldn’t see it. Just like Microsoft couldn’t see Google. Etc. Etc. Etc.
At the Federal Trade Commission, I argued that in the arena of artificial intelligence, developers should release enough information about their models to allow smaller players and upstarts to bring their ideas to market without being beholden to dominant firms’ pricing or access restrictions. Competition and openness, not centralization, drive innovation.
That’s fine. Maybe even good. But that’s also apparently not how DeepSeek had their breakthrough. As both Microsoft and OpenAI are now suggesting, it sounds like they distilled DeepSeek R1 from OpenAI’s closed models. So this undercuts that entire argument — which again, might be a good one!
And finally — mercifully:
In the coming weeks and months, U.S. tech giants may renew their calls for the government to grant them special protections that close off markets and lock in their dominance. Indeed, top executives from these firms appear eager to curry favor and cut deals, which could include asking the federal government to pare back sensible efforts to require adequate testing of models before they are released to the public, or to look the other way when a dominant firm seeks to acquire an upstart competitor.
Enforcers and policymakers should be wary. During the first Trump and then the Biden administrations, antitrust enforcers brought major monopolization lawsuits against those same companies — making the case that by unlawfully buying up or excluding their rivals, these companies had undermined innovation and deprived America of the benefits that free and fair competition delivers. Reversing course would be a mistake. The best way for the United States to stay ahead globally is by promoting competition at home.
Yeah I mean lede totally buried here. All the way at the end. Khan would like the current administration to keep up their aggressive approach to antitrust and M&A with regard to Big Tech. Her approach. And it sounds like some in the new Trump administration are open to that, so this is the case for them. Perhaps the op-ed really should have been titled “Dear JD Vance”.
What she fails to mention here is a complete and utter lack of understanding about the second order effects of her moves. Is blocking some M&A a good thing? Undoubtedly, when warranted. But by effectively blocking it all, the chilling effect had all kinds of unnatural effects on the market. And that ultimately hurt not just the VCs looking for exits, it hurt the startups doing the same. And it created a situation where fewer deals were getting done and as such, fewer companies were being started. This, incidentally, undoubtedly led to more people staying in their Big Tech jobs rather than striking out on their own to try to strike it big. The risk became too high with the only viable outcome an IPO — oh and by the way, that window was also shut due to some of this regulation!
So congrats on destroying the market for a time, Lina Khan. Really nice work. But the market endures. AI sprung from the ashes and now that M&A may be a viable path for companies again — and not just the silly "hackquisition" nonsense — we’ll likely see more. But if we had four more years of Khan, that entire industry may have been snuffed out as well. Except for… guess who? BIG TECH.