Article Summary
Reid Hoffman, the LinkedIn founder and Democratic megadonor, has pledged to donate $10 million to support Kamala Harris’s presidential campaign, with the request that she fires Lina Khan, the current chair of the Federal Trade Commission. Hoffman and another prominent Harris donor, Barry Diller, have criticized Khan for “waging war” on American business and being against “almost anything” that would help American businesses grow. Both Hoffman and Diller have personal reasons to oppose Khan, as Hoffman sits on the board of Microsoft, which is being investigated by the FTC for its licensing deal with an AI company co-founded by Hoffman, and Diller’s companies are reportedly under investigation by the FTC. Hoffman argues that Khan’s aggressive enforcement of antitrust laws is bad for creating new competitors, as it will quell investment and prevent start-ups from cashing out by selling to a bigger company. This argument is gaining adherents among Khan’s detractors in Silicon Valley on both the left and the right.
What This Means for You
- Understanding the motivations behind Hoffman and Diller’s criticism of Lina Khan and the FTC’s enforcement of antitrust laws.
- Recognizing the potential impact of tightened antitrust enforcement on venture capital (VC) investors and start-ups, who may have fewer suitors competing to acquire them, leading to lower valuations and less funding.
- Considering the argument that aggressive antitrust enforcement is necessary to create new competitors and promote competition in the tech industry.
- Staying informed about the outcome of the fight over the FTC, should Harris become president, as it could say a great deal about how she will govern and the future of antitrust enforcement in the tech industry.
Original Post
Updated at 3 p.m. ET on August 30, 2024.
Reid Hoffman, the LinkedIn founder and Democratic megadonor, seems to love almost everything about the Biden administration. And, he says, he’s “thrilled” by the prospect of a Kamala Harris presidency. That’s why he’s donating $10 million to support her campaign.
He has just one request: Fire Lina Khan. In a July interview with CNN, Hoffman accused the Federal Trade Commission chair of “waging war” on American business and said he hoped Harris would “replace her” if elected as president. That same week, another prominent Harris donor, the media and technology executive Barry Diller, told CNBC that Khan is a “dope” who’s against “almost anything” that would help American businesses grow.
Hoffman and Diller have plenty of personal reasons—billions, even—to oppose Khan. Hoffman sits on the board of Microsoft, whose $69 billion acquisition of Activision Blizzard the FTC tried and failed to block. Microsoft is also being investigated by the agency for its licensing deal with an AI company that Hoffman co-founded. (In a follow-up interview with CNN’s Jake Tapper, Hoffman stressed that his opinion on Khan was offered in his capacity as an “expert,” not as a donor. This parsing caused Tapper to respond, incredulously, “But there aren’t, like, a hundred Reid Hoffmans!”) Some of Diller’s companies, too, are reportedly under investigation by the FTC.
Hoffman says, however, that he is motivated by concern for the little guy. The FTC under Khan has become more aggressive in seeking to block acquisitions—particularly by tech giants—than it has been in decades. The same goes for the Department of Justice Antitrust Division under Jonathan Kanter. If the agencies keep it up, Hoffman argues, then start-ups won’t be able to cash out by selling to a bigger company, and investors will stop giving them money in the first place. “That’s going to quell investment, and that’s bad for creating new competitors,” he told Tapper. (Hoffman declined to be interviewed for this article.)
This argument is gaining adherents among Khan’s detractors in Silicon Valley on both the left and the right. In a July blog post, the Trump-supporting venture capitalist Marc Andreessen complained that regulators “are punitively blocking startups from being acquired by the same big companies the government is preferencing in so many other ways.” In 2021, the National Venture Capital Association warned that “expanding antitrust law to restrict acquisitions could chill investment into startups.” Now that’s precisely what’s happening, NVCA president and CEO Bobby Franklin told me in an interview.
The question of what antitrust means for tech start-ups might seem obscure during the home stretch of an election in which nitty-gritty policy appears to hardly matter. But the outcome of the fight over the FTC, should Harris become president, could say a great deal about how she will govern. The commitment to strong antitrust enforcement has been a pillar of the Biden administration’s populist economic agenda. Hoffman and company are now challenging that agenda on its own terms. Do they have a point?
Key Terms
- Antitrust enforcement
- Lina Khan
- Venture capital (VC) investment
- Tech start-ups
- Acquisitions
- Mergers
- Federal Trade Commission (FTC)
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