FTC Chair Lina Khan on Startups, Scaling, and "Innovations in Potential Lawbreaking"

Connie Loises
Hi, I'm Connie Loises and this is Alex Gove and this is strictly vc download.

Hi all.

Alex Gove
We have a special Strictly VC download for you today, recorded earlier this week in Washington, DC at the Woolley Mammoth Theater.

Connie Loises
It was there that we hosted our.

Alex Gove
Most recent TechCrunch Strictly VC event, and it was so fun. There was a great crowd, lots of investors, lots of founders, lots of sport coats, which you definitely do not ever see anymore in the Bay Area. I would say the networking aspect of the evening was a major success considering that when I left around 30 minutes after the end of the show, the room was still full and buzzing. My apologies to the people at the theater who had to do the work of kicking out everyone. The program itself was also really excellent, thanks to our great guests, including AI researcher Helen Toner, Revolution founder Steve Case, Luther Lowe, who is the public policy head of the famed accelerator program Y Combinator, and FTC chair Lena Khan, who was the youngest person sworn into her position in 2021 and whose dynamic approach to leading the agency and taking on big companies that the FTC worries have gotten too big has won her a lot of superfans, as well as plenty of ardent critics. Do check out the interview with Steve Case on the found podcast that's produced by TechCrunch. This will air on June 18. Meanwhile, coming here, you will find my sit down with chair Khan, which I really enjoyed, and I hope that you will too. Among other things, we talked about the fact that sitting before a live audience, there were a lot of mixed feelings about her in the room. More from that conversation in a minute, but first, a word from our sponsor.

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Connie Loises
Hello again.

And now I'm very excited to be sitting down with FTC chair Lena Khan.

A little background, if it's helpful.

Lena was sworn into her come on, Lena. Thank you.

Thank you again so much.

Such a privilege to have you here.

Alina was sworn into her position as chair of the FTC in June of 2021, making her the youngest person ever to hold the job. Before heading to the FTC, she was an associate professor of law at Columbia Law School. She also served as counsel to the US House Judiciary Committee's subcommittee on antitrust, Commercial and Administrative law, was legal advisor to FTC commissioner Rohit Chopra and was legal director at the Open Markets Institute. Before we get started, I wanted to let you all know that Chairman Khan has very nicely offered to answer some questions. She really like would prefer to engage with the audience. And I know there's some reporters here as well. I don't know if you're up there or down here, but also investors, founders. So just know that there's going to be a little time. I don't know how long we can keep her, not endlessly, but for a few questions. So again, so great to meet you.

So over the last two decades, obviously Washington has been sort of maybe hijacked, overstating it, but by big tech, Microsoft, Google, companies that maybe don't have the same interests in mind as startups. And I know that you want to talk a little bit about rectifying that. I thought we could start with your as it relates to it, to tech. And I realize the FTC is covering so many different things, it's sort of mind boggling.

But AI is obviously very top of mind for you. And I was hoping that maybe we could start with the Wall Street Journal report that federal regulators are moving forward with an investigation of Microsoft and OpenAI and Nvidia. If there's anything you can sort of say about what your plans are there.

Lena Khan
Well, first of all, it's so great to be here and get to sit down with all of you. And I think you're right that there is a lot of interest across DC and making sure that we are able to harness the opportunity and potential that these tools present, while also making sure that these markets stay open and fair and competitive, rather than allowing certain types of bottlenecks or choke points to emerge in ways that could undermine that competition and that opportunity and that innovation. And so that's really the prism that we're looking at all of this through.

We're really looking across the stack. So from the chips to the cloud to the models to the downstream apps to try to understand what's going on in each of these layers. We've been very active in hearing from founders and startups and really want to hear from folks on the ground about what do they see as both the opportunities but also the potential risks.

I was out in Silicon Valley a few months ago, and it was really interesting to hear from those founders and in particular about how right now there is a whole lot of opacity around who's getting access to some of these key inputs, be it the compute, be it the models. On what terms?

If you're using some of these models, is there any guarantee that you're not effectively feeding back proprietary information?

And so I think a lot of excitement, but we are also hearing some wariness that can emerge when you realize there's a lot of power already concentrated. And that power being concentrated could foreclose innovation and competition. And so that's what we're keeping in mind.

The FTC also enforces the nation's consumer protection laws. And so we're also looking at this through the prism of privacy and data security and fraud and those sorts of issues.

We have a consumer complaint database and we're already seeing, for example, the number tick up on issues like voice cloning, fraud, and so trying to get a handle on how do we stay ahead of some of that.

Connie Loises
So there's so much opacity, as you said. And it also seems like some of the people that you are trying to regulate are getting more creative about the deals that they're striking. So another journal report said that you are looking into Microsoft's acquisition of. Well, maybe not acquisition, but it's deal with Inflection AI, which some of you may know or may not, is an AI software company. And Microsoft in March hired the co founder, basically brought aboard all of the employees, and now is now paying the company a $650 million licensing fee to resell its technology. So it's not technically a merger.

And so I wonder in part if they talk to your agency or other regulators about what they were doing, because I know when it comes to an actual merger, there is sort of a threshold over which they have to talk to you so you can kick the tires. That's something like $120 million. So did they talk to you about this deal? Or was that, what, did you read about it in the journal?

Lena Khan
So I'm limited in what I can say about some of these specific deals or specific potential matters. I will say, as a general matter, you're absolutely right that we are interested in being vigilant to make sure that we're not seeing evasion of the existing laws. And we've been really clear that all of the existing laws still apply. Right. The laws prohibiting mergers that may substantially lessen competition, the laws that ban price fixing and collusion. And so whether you're doing that price fixing through algorithm or through a handshake, both still illegal. And so across the board, we're trying to scrutinize and make sure we're not seeing some of these innovations and potential lawbreaking. We want to make sure that everybody's playing by the same rules and that we are enforcing those rules. I will say earlier this year, we also launched an inquiry into some of these strategic partnerships and investments to make sure we were understanding what was really going on here. We'd heard some concerns about, for example, whether some of these partnerships and investments could be resulting in privileged access for some to certain types of inputs, disfavored or exclusionary access for others.

Whether these partnerships are coming with a certain level of control to be able to directly shape the trajectory of some of these business decisions, including competitive business decisions. And so we wanted just to make sure we were getting a handle of some of that. And so that work is still ongoing as well.

Connie Loises
I was going to say, trying to disentangle that stuff has to be so daunting, because it really seems like it's changing by the day. I mean, friendships are forming and falling apart very quickly. I did want to ask, because Apple had many announcements yesterday, it's integrating with OpenAI.

It said it is open to working with other third parties, embedding its products with OpenAI, but also potentially Google Gemini. But it does seem like a lot of the partnerships are among the same players that are probably a little bit concerning to you right now. And I wondered what you thought of what you saw come out of that event.

Lena Khan
Just to step back. I think it is a really interesting moment, because historically we've seen that some of the most significant breakthrough innovations have historically come from the startups and the entrepreneurs and the small guys who are able to just see things differently, see an opening in the marketplace, and really disrupt in ways that disintermediates the big guys, or really provides important competitive checks on them. It's true that right now what we could be saying is that some of the existing incumbents may be controlling access to the inputs and the raw material that's needed for some of these innovations. And so we need to be vigilant to make sure that that moment of competition and innovation and disruption is not going to be co opted by the existing incumbents in ways that will close off the market and prevent us from really enjoying the innovations and competition that have historically kept our country ahead. If you look at the last century, it's really been important interventions to keep the market open, be it all the way back with the AT and T consent decree where the Justice Department required that at and t open up its patent vault. That ended up feeding huge amounts of innovation to the big Microsoft lawsuit, which ended up preventing Microsoft ultimately from picking winners and losers in the Internet age and allowed the googles of the world to really emerge and thrive. And so similarly, we want to make sure that the arteries of commerce are open, that the pathways of commerce are open, and if you have a good idea, if you're able to commercialize it, if there interest in the marketplace, that you have a fair shot at competing, and your fate is tied to the strength of your idea and your business talent, rather than whether you're threatening one of the big guys who could stomp you out.

Connie Loises
Well, I was just talking to Luther, who's going to be joining me on stage in a little bit. And we were saying that yesterday on the heels of that announcement, a lot of people were kind of, there were memes coming out about all the startups that are going to be put out of business by what Apple introduced Grammarly Otter, a Google team that has a transcription service.

I mean, hopefully not, but it seems like a danger. You mentioned the AT and T action, I guess, of maybe 40 years ago, and I've seen you talk a little bit about not buying this argument that these companies have to be protected because if they're slowed down in any way, it sort of weakens us as a country. There are countries where they're not slowing down their AI. I wondered if you could talk a little bit about that, because I think on the one hand, there's probably plenty of people who agree with you, and of course they want to see things broken up so that startups can breathe. I think there's other people that are truly worried about that possibility and might say, well, this is nothing like breaking up the bells. These are companies that, or this is technology that fuels autonomous weapons and moves so much faster than anything we've ever seen before.

I guess, how do you kind of lay out the case for breaking things up, but also not putting the country at any risk, which the companies say that you'll do?

Lena Khan
It's interesting because even 40, 50 years ago, as the Justice Department was investigating at and t, it was the Defense Department that stepped in and said, hey, we really need to tread carefully here because taking antitrust action against at and t would pose a national security risk. And so even back then, we were hearing a lot of these analogous arguments.

There are some natural experiments. I mean, I think at various moments we faced a choice as to whether we should in fact protect and coddle our monopolies, or instead whether we should protect the laws of fair competition.

And time and time again, we chose the path of competition. And that is what ended up fueling and catalyzing so many of these breakthrough innovations and so much of the remarkable growth that our country has enjoyed and has allowed us to stay ahead globally. If you look at some other countries that instead chose that national champions model, the lex, protect and coddle our monopolies model, they're the ones who got left behind. And so I think we need to keep those lessons of history in mind as we again choose a path.

You know, another merger that was justified in part on some of these national champion arguments was the merger of Boeing and McDonnell Douglas in the late 1990s. And I think we can all see how some of those dynamics have unfolded. And so I think we just need to be very wary of these national champion arguments and really have faith in open, fair, contestable, competitive markets as being what's going to be the driver of innovation and our national lead globally.

Connie Loises
So there are startups here and there are VC's who have mixed feelings about you, as you know, because they want their companies to thrive. But they're also worried that you've been so vocal about having your eye on these companies that they're not doing anything.

And so they don't have, you know, exits are obviously a huge path, a big exit path for VC's and for founders. So how do you make them comfortable that you're doing really what's best for them in the short and long term?

Lena Khan
So when we enforce the antitrust laws, we really look at, what do these laws say? The Clayton act says we have to prevent mergers that may substantially lessen competition or tend to create a monopoly. And so that's the standard we apply.

And we certainly understand that for some startups and founders, acquisition is a key exit path that they're interested in. Really what the law prohibits is an exit or an acquisition that's going to fortify a monopoly or allow a dominant firm to take out a nascent threat and a competitive threat. And I think our agency has some lawsuits underway. The Justice Department has some lawsuits underway that are really looking back and recognizing that some of the acquisitions that were done over the last couple of decades really did allow some of those incumbents to take out nascent competitive threats to really fortify their monopoly. And so it's important to learn from that, just to step back.

In any given year, we see somewhere up to 3000 merger filings that get reported to us.

Around 2% of those actually get a second look by the government. And so you have 98% of all deals that for the most part are going through.

I'll also say that if you are a startup or a founder that is eager for an acquisition as an exit, a world in which you have five or six or seven or eight potential suitors, I would think is a better world in which you just have one or two actually promoting more competition at that level to ensure that startups have more of a fair chance of getting better valuation, more control over some of the deal terms, I think would be beneficial as well.

Connie Loises
Just curious, because again, I see you in the headlines all the time and I'm so amazed.

How many cases is your team juggling concurrently? And there's 1500 people at the FTC.

Lena Khan
Around 1300.

Connie Loises
Okay.

Lena Khan
Which is actually 400 people smaller than they were in the 1980s, even though the economy has grown 15 times over.

Connie Loises
So 1300 people, a budget of $400 million a year. And how many cases?

Lena Khan
I mean, it depends on how you count, but, you know, dozens of cases on the antitrust side, you know, close to 100 cases, sometimes on the consumer protection side. So it's a pretty sizable portfolio.

We have a really fantastic team and we're a small agency, but definitely punch above our weight.

Connie Loises
Well, I think what's amazing about you is I don't know if you're taking more actions than your predecessors or if you're just more visible about it, which has the same effect, because you're talking about it so much, you've put people on notice. Do you know if you're moving at a faster pace than your predecessors in the role?

Lena Khan
Yeah, I mean, you can look at the numbers and, you know, there are some upticks there, but to my mind, I think counting the number of lawsuits or the number of investigations is only one way to try to capture impact.

To my mind, the types of cases you're bringing is important. And one thing that's been important for me is to make sure that we're actually looking at where do we see the biggest harm, where do we see players that we think are more systematically driving some of these problems and illegal behaviors? And so in the same way that being able to go after the mob boss is going to be more effective than going some of the henchmen at the bottom, I think you want to be effective in your enforcement strategy. And so that's why we have been looking upstream and taking on lawsuits that can really go up against some of the big guys. But we think if we're successful, have a really beneficial effect in the marketplace. And when it comes to deterrence, I think we're already seeing some of that. We hear routinely from senior dealmakers, senior antitrust lawyers, who will say pretty openly that as of five or six or seven years ago, when you were thinking about a potential deal, antitrust risk, or even the antitrust analysis was nowhere near the top of the conversation. And now it is upfront and center. And so for an enforcer, if you're having companies think about that legal issue on the front end, that's a really good thing, because then we're not going to have to spend as many public resources taking on deals that we believe are violating the laws.

Connie Loises
Yeah, well, I think it's a great strategy, but it does seem twofold. So you're going after the right or the big targets, and you're doing a great job of just explaining what your strategy is to everybody at every opportunity. I did want to ask to scale your relatively small office with a relatively constrained budget. Are you using AI?

Lena Khan
So I'm sure we've all seen the cautionary tales of lawyers using some of these AI tools to write their complaints and then get inchited in court.

I think we are thinking about are there ways, especially with some of our economic analysis, to be benefiting some of these tools?

Obviously, being able to do that requires pretty significant compute upgrades, which we're asking Congress for more funding to be able to do. We do have a really fantastic team of technologists on board, which was a big priority for me to make sure that we have the right talent and skillset onboard to make sure just at a basic level, we understand how this stuff works. And so we've been really thrilled to be able to hire a very, very talented set of people. And it was interesting when we were going about this, we talked to peer agencies across the world that had started to build up technology shops. And one thing we heard was that it can be really difficult to recruit. We can't really compete with private sector salaries. And so that could be a real challenge.

We were really struck that within a couple of weeks, or having some of these postings out, we got somewhere to the order of 600 to 700 applications for technologists who wanted to come work at the FTC. And so it's been phenomenally successful to be able to build up this team. Data scientists, data engineers, AI experts, people who can really embed with our lawyers and our economists. As we're doing the investigations, we've already had lawsuits that allege certain types of practices that we were only able to understand because of our technologists who were able to identify, hey, here's how the algorithm is really working, or here's how this facial recognition technology is or isn't working. And so we've seen huge payoffs already. Those technologists also work closely with our teams as we think about crafting remedies to make sure that, again, we're really crafting these things in a way that will be effective and make an impact in the market.

Connie Loises
That's great. So very mission driven. I did want to ask about your, I guess, some of the numbers and whether you're happy with them or unhappy or how you feel about them. So the number of deals has dropped dramatically while you have been in charge, but it's not just because of regulatory scrutiny. It's high inflation. It's like valuation gaps. But the number of deals dropped, I think, between 2022 and 2021 by half. And so I just wondered if you have any thoughts about the FTC's impact there and how you feel about that traumatic disparity.

Lena Khan
Yeah, I mean, as an agency, we're a law enforcer, and so we're agnostic as to just volume of deal making. Our only concern is just preventing and prohibiting illegal deals, which is a subset of what we see. But beyond that, it's not for us to say deal making good or deal making bad. It's really just to say, don't pursue illegal mergers, and those are the ones we stop.

Connie Loises
Right. Well, I did wonder. So the standard that you sort of operated on, not you specifically the FTC, was, what is it called, the consumer welfare standard, and that sort of judged a monopoly by price standards to some extent. So if companies were charging customers too much, that was sort of an obvious red flag for you. You've had to come up with different proxies, given that the companies that you're targeting are giving away their very good products for free in exchange for data. I wonder, do those proxies have to remain somewhat constant, or can they be, can they change over time? How are you sort of rethinking how you go after a monopoly?

Lena Khan
So we're really focused on what are the laws say that Congress wrote, and the laws are very focused on protecting competition and protecting fair competition.

What the dimensions of competition are can change. Right. You definitely might have markets where there's rivalry on price, and so firms are jostling to see how much they can lower price. But there are all sorts of markets in which competition is happening on different dimensions. Right. Including things like innovation.

In one of our cases, we were also able to argue to the court successfully that degradations in privacy, for example, can be a harm to consumers, even if the cost is $0. And so really thinking about privacy as an important dimension of quality and something that users care about. And so that was a really important programmatic advance in how we think about, you know, updating our approach to law enforcement in a way that maps onto the 21st century and how businesses are really functioning and operating and competing. And so across the board, we're always wanting to narrow the gap between, you know, how antitrust people are thinking about markets and what's really happening in the market.

I got my start in all of this, actually, as a business journalist, just talking to people, talking to businesses, talking to founders. And at that point, had seen that there was a gap between how business people were seeing and experiencing competition, and how sometimes antitrust doctrine and lawyers and economists were understanding the markets. And so a big focus for me has been to close that gap. And that's why we're regularly opening our doors to hear from people across the board. We do regular open commission meetings.

We've been traveling around the country, meeting with everybody from pharmacists to farmers to text startups, really wanting to make sure we're directly hearing from people in the trenches, people trying to run a business, to understand what are they seeing? What are the challenges to open fair competition that they're seeing.

Connie Loises
I also just wanted to ask you a little bit about something that's maybe, like, low hanging fruit, but what the FTC stance is on section 230, because I, you know, Steve Case was just on stage. Hey, Steve.

And I've talked to Steve about this in the past. He was, in part, he was there at the beginning of the Internet.

This language was written in part to help AOL and its peers at the time to keep them from being sued into oblivion over misinformation that would appear on their platforms. But here we are, 30 years later, we can't get rid of this thing. These companies are spending hundreds of millions of dollars to keep it in place. And it just feels like if that could be unwound or done away with, it would be very helpful. But I don't know if that's far too simplistic. What are your thoughts?

Lena Khan
Ultimately, that's a decision for Congress to make. I think there's no question that the law was passed in a very different era, trying to solve for a very different set of problems than what we see now. And certainly in the FTC's cases, especially on the consumer protection side, we have seen this section 230 creep, where even when we're going after bread and butter fraud, bread and butter deception, and we're looking upstream at the actors that are enabling or facilitating some of the lawbreaking.

You know, we definitely hear section 230 defenses. I think one really interesting question for me is how do we make sure that our approach to the liability regime here is mapping on to the business model and the business incentives. And so, especially if you have companies who are being driven by volume and being able to report things like monthly active users, and those being the types of metrics that are viewed as proxy for their success, what does that mean for their incentives to either police their platforms or turn a blind eye to their platforms in terms of things like fake accounts and some of the fraud and spam that we see.

I think wanting to make sure that we don't see a mismatch between what the platform's incentives are from a business perspective and what's actually good for the users and customers is going to be really important. And getting section 230 right as a regime, there is a big part of that.

Connie Loises
Yeah, let's hope.

I don't know if we've got the microphones out in the. Oh, wow, lots of people.

Let's see. Slico, can you maybe run it over to. Thank you.

Lena Khan
Sure.

Alex Gove
Yeah.

E
Is it on?

Hi, my name is Emma Bates. I'm a founder and CEO here in the Arlington area.

Your role at the FTC has a lot to do with mergers and percentages of markets, but I remember you as the person who wrote the famous antitrust paradox paper. And I'm wondering, what have you learned since taking this role from this new vantage point about the way that a platform kind of scrambles up the who is the product and who is the customer, especially in terms of the asymmetric knowledge about what the value of data is.

What has been interesting to you in the last few years, seeing as time has gone by and the market has changed, but also from your new role? Thank you.

Lena Khan
Yeah, it's an interesting question, and I will say generally, I think we've all seen a lot and learned a lot over the last decade. Especially, we see some of the lifecycle of these platforms. Right. In terms of the business strategies and practices that they undertake in the early years when they're really trying to gain scale and be able to spin up the flywheel. And then the ways in that digital markets, markets can tip. Right. You have certain types of entry barriers, the network effects, the self reinforcing advantages of data that can then lead a firm's incentives to change what they feel they have a dominant position and are able to protect that dominant position through emote. And so I think across the board we've seen that switch be flipped. And I think this is also relevant when we think about things like openness. There's a lot of discussion right now about openness in the IA context. And I think we saw historically open source was such a key vector for innovation and catalyzing a lot of the, you know, freedom for developers to tinker and really deliver a lot of benefits. But I think something that we saw in Web 2.0 was the open first, close later strategy where openness was used in a way to bring on developers and get some of that scale, and then the tactics switch. And so I think similarly, as we're trying to apply some of those lessons and experiences in this context, I think we need to be very vigilant as to what does openness really mean in the AI context. How do we make sure it's not just a branding exercise, but when you actually look at the terms, it's truly open?

And then how do we make sure that we're going to try to get ahead of some of those open first, closed later dynamics in ways that could actually be very detrimental? I think there are just a lot of lessons to be learned generally, but I think especially at this moment, as we're thinking about some of these AI tools, a very right moment to be applying them.

F
Hey, thank you for your time today. I'm Brandon Andrews. I'm a local entrepreneur. I also do casting for shark tanks. So I meet a lot of entrepreneurs that are interested in exiting via acquisition. So I saw your interview on Squawk Box and I thought one of the moments was really interesting. The hosts were saying they have m and a friends who are complaining that now they have to think about antitrust at the beginning of a deal versus at the end of a deal. And you came back and said, well, we have rules for a reason and as an enforcer, we want people to think about it. For these larger deals, you can add on those billable hours to a deal, but as we go down market, kind of where I sit, those billable hours for smaller companies in an M and a deal add up pretty quickly. No offense to any M and a lawyers in here. As an enforcer, is that kind of consideration something that you consider as you're thinking about enforcement, the additional cost or additional burden on smaller companies? And if it is, is there a recommendation on what you think the best practices for a smaller company? Looking at an exit to balance the regulatory piece with everything else in a more resource constrained environment?

Lena Khan
It's a good question. And, you know, as we're looking at these deals, we're really focused on the legal standard and trying to understand what are the facts here. How are these firms competing? Are they competing? Is this going to be a deal that may substantially lessen competition?

One thing that we're really keen on figuring out is how do we have a really robust screening mechanism on the front end? Because once these reportable deals come in, we really only have 30 days to figure out is this going to be something we investigate or not? And when these deals are reported right now, a lot of the information that's being provided is actually not that probative in terms of the competition analysis. And so we proposed a change that would require companies to submit more information upfront, with the idea being that that would lead to a better screening mechanism and so we'd be able to identify much earlier what are the deals that are problematic, but also what are the deals that don't seem problematic and that overall be able to reduce some of the burden that way. So, you know, that's the, that's a change that we've proposed. If we're able to finalize it, I think it'll have a really good impact.

G
Hi, Sherkan. I'm the CEO and co founder of an AI safety startup. And I'm curious, in your view, on the FTC's role in protecting consumers by enforcing AI safety, and what advice, if any, you'd have to AI safety startups wanting to help in that role.

Lena Khan
So we're thinking a lot about our consumer protection mission here, in part because, you know, these are not in many ways hypothetical risks. We're already seeing them in terms of how some of these AI tools are turbocharging fraud and really, you know, leading people to get scammed and defrauded already by much more kind of sophisticated scams. And we're looking to figure out how do we solve for that.

One thing we've been doing is putting out kind of regular guidance to put the market on notice about how some of our existing authorities are going to be applying in this context. We're also using more innovative tactics. So we just did something that was called our voice cloud challenge, where we invited from the market and the public ideas for how can an enforcement agency like the FTC be able to detect and monitor in more real time way, whether, you know, a phone call or a voice is real or whether it's using voice cloning. And so we just announced some of our winners there, which we hope will also help you know, spur in the marketplace some of these more innovative techniques and mechanisms to be stopping some of this voice cloning fraud.

But more generally, I think this is all hands on deck moment in terms of some of the risks here and how do we get out ahead of them?

Connie Loises
I think maybe one more question, then we've got to let the chairman go.

H
My name is Jim Bennison. I'm a local entrepreneur and founder and CEO. But my question goes to AI in the marketplace today. There's a lot of hype out there. Gartner has got their hype cycle report, and they're all over the fact that there's probably more hype in the AI space than in any product ever in history because it's so easy to hype. It seems like the dividing line between hype and false advertising is razor thin. You guys are the false advertising agency. You're supposed to police that. Did Congress give you $87 million like they did the IR's to hire more investigators to go after that?

Lena Khan
No, they did not. And we actually have a whole AI hype work stream right now to try to ferret out some of this because we absolutely are seeing the same thing that, be it on the customer side or even things like business opportunities, some of these AI tools we think are being used to market and to kind of inflate and exaggerate the value of what may be offered. And so we want to make sure that we are policing that. We've already had a couple of kind of AI hype, deceptive advertising cases come out, and it's an area we're continuing to screw.

Connie Loises
So, Chairman Connor, again, thank you so much. I wanted to ask one last question, which is, I noticed that your term is ending in September, but I imagine, obviously, you'll stay in place until there's a successor chosen. Can you be reappointed? I don't even know. Is that possible?

Lena Khan
So the way that the FTC act works is that commissioners can stay in their seat until their replacements, until and unless their replacements are kind of appointed and confirmed. And so there is an opportunity to stay.

Connie Loises
Oh, that's great. And I guess I just was wondering, I mean, what do you hope your legacy will be?

Lena Khan
So, look, our focus has been on enforcing the law without fear or favor and making clear to the american public that the FTC is out there fighting for them and protecting them from illegal business practices, be it for consumers, be it for workers, or be it for entrepreneurs and small businesses that just want to get a fair shake in the marketplace.

That's a core focus of that, and we're going to be continuing to build out that work.

Connie Loises
Well, I'm curious to see if there's many more sort of people in the Linacon mold going forward. I think there will be. It's been really energizing watching you lead the agency. Thank you so much for joining us.

Lena Khan
Thank you so much.

Connie Loises
Really a pleasure.

Affinity
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FTC Chair Lina Khan on Startups, Scaling, and "Innovations in Potential Lawbreaking"

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1: Introduction and Context

2: Interview with Lina Khan

3: Audience Q&A

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