US Government Cranks Up the Heat, FTC vs. Big Tech, Microsoft’s Inflection Deal
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Welcome to The Neuron. I'm Pete Huang. Today, the US government has opened the door for inquiries into the latest shenanigans by big tech companies. What have these companies done to deserve this? And how does this affect AI? It's Saturday, June 8th. Let's dive in. If there's one thing that Silicon Valley loves more than starting companies, it's exiting companies. After all, that's where you make your money, right? If you write a check to fund a new startup, you get shares in the company. And as an investor, you better see a pathway for that company to IPO, for it to sell to another company, some way for you to sell your shares and convert them back to dollars. So anytime something happens that results in fewer options for you to sell your shares in your companies, you're going to be a little bit peeved.
Now that's on the startup side. If there was somehow a group or a person or government body or whatever that was also poking around big tech companies, asking some hard questions about what they're doing or otherwise stopping them from doing what they want, Well, I can guarantee you all of tech, the people working on startups, the people who invest in startups and the people working in big tech would be unified in being annoyed at this one particular party. Welcome to the FTC, the Federal Trade Commission, which this week is opening inquiries into all things AI. NVIDIA, OpenAI, Microsoft. Let me walk you through the background, some of what the FTC has done recently, and what they're looking at with these inquiries.
Lena Kahn is the chairperson of the Federal Trade Commission, the part of the US government responsible for enforcing antitrust law and protecting consumers. In 2021, President Biden nominated her to the FTC and then immediately appointed her to be the chair of the whole thing. She was 32 years old when that happened, just three years out of law school. She's the youngest person to ever be named chair of the FTC. Lina Khan has been looking at antitrust and anti-monopoly for a while now. She went to undergrad at Williams College studying political science and then spent four years at a think tank conducting anti-monopoly research. She then went to law school at Yale, which has graduated more politicians, judges, CEOs, and top lawyers than you and I could ever think of.
And in her third and final year of law school, she publishes an article in the Yale Law Journal titled Amazon's Antitrust Paradox. Her core argument in the paper argued that the way the government understood and enforced antitrust was too narrow for the age of modern companies. She spends the paper digging into the business model and business practices of Amazon, exploring just how dominant they are and arguing that the nature of the business requires a different way to pursue antitrust. This paper is an absolute hit in the legal field.
Everyone, all the top legal thinkers, people in the government give her massive credit for putting together a very well thought out critique of how the government needs to react to businesses in the age of the internet.
That certainly includes all of the big tech companies that we know of today. Now, after she graduates law school, Lena Kahn joins the FTC staff. She works under an existing commissioner by the name of Rohit Chopra. And just three years later, Commissioner Chopra moves on and President Biden taps Lena Kahn to replace him. Lena Kahn is a trailblazer in the legal field, and she's spent a lot of time thinking about the right level of wrangling that the government should be doing with big tech. To this end, she has been very successful. Now, under Lena Kahn's leadership, the Federal Trade Commission, in partnership with the Antitrust Division of the Department of Justice, has filed more challenges to corporate mergers in 2022 than any year prior.
If you're a company and you do a deal, and if that deal is worth more than $111 million, you have to let both the FTC and the DOJ know, and you have to wait 30 days before you close the deal.
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