The Push to Fire Lina Khan Reveals a Serious Problem in Silicon Valley.

By Nate Loewentheil

Mr. Loewentheil is the founder and managing partner of Commonweal Ventures, a venture capital firm.

'High-profile venture capitalists are demanding that Kamala Harris, if elected president, fire a top regulator for her aggressive policing of Big Tech. Not only do I disagree with them, I see their attacks as evidence of a bigger problem with the venture capital industry and, ultimately, our technology sector, which is a critical driver of our economy and society.

Venture capital may be a small segment of the finance industry, but it has been a linchpin of the modern computing era. . .

Times have changed. The power of major technology incumbents is now so great, and the dependence of venture capital firms on those incumbents so complete, that today’s V.C.s are now siding with the monopolies — and fighting government agencies that are trying to advance competition.

These tech monopolies were enabled in part by our government’s decision to loosen the reins on our biggest corporations. For much of the history of antitrust policy, which dates to the late 19th century, courts remained suspicious of market consolidation and used antitrust to maintain competition. In a landmark case in 1911, the Supreme Court ruled that Standard Oil, which controlled nearly 90 percent of the U.S. oil market, had used predatory pricing, control of oil pipelines and leverage with railroad shippers to unfairly obstruct competitors. It ordered the company be broken up.

That began to shift in the 1970s and 1980s, when legal scholars, influenced by free-market economists, argued that markets can police themselves, and the focus of antitrust should be on maintaining the quantity and prices of goods rather than on the levels of competition or number of businesses. . .

In 2017, Lina Khan, then a student, identified the problem in an influential law review article that argued that Big Tech was amassing market power in ways that failed to register in the current legal regime. Appointed chair of the Federal Trade Commission four years later, she immediately set about pushing for a return to the more expansive antitrust jurisprudence of earlier eras.

You would think that venture capitalists — who purport to be in the business of displacing incumbents — might support the F.T.C. Instead, many have attacked. Ms. Khan is “not a rational human being,”. . has argued that Ms. Khan is trying to “dismantle companies” and called on a future President Harris to replace her.

These venture capitalists argue that regulators are chilling mergers and acquisitions, which can help larger companies to become more efficient and thus offer better, cheaper services. I think that is a red herring. . .

Instead, I believe the attacks on Ms. Khan and the F.T.C. are an effort to protect the few very large technology companies that dominate markets. . .

American capitalism is at its best when firms compete and incumbents feel pressure from below. As markets concentrate, newly entrenched monopolies start exercising their power to foreclose challenges. . .

A robust federal antitrust program may be the only force that can liberate technology markets from the hold of Big Tech and restore venture capitalists to their true calling: advancing the cycle of innovation that powers American capitalism.'

https://www.nytimes.com/2024/10/26/opinion/lina-khan-ftc-venture-capital-silicon-valley.html