The Federal Trade Commission and the U.S. Department of Justice Antitrust Division, the nation’s two federal antitrust enforcers, announced Tuesday that they plan to “modernize antitrust enforcement laws” and change their merger framework to crack down on large business deals. 

Industry groups are ringing the alarm, claiming that the changes would harm a recovering COVID economy and could potentially threaten U.S. security. In her first annual address for the Chamber of Commerce, the business community group that doubles as the largest lobbying group in the U.S., CEO Suzanne Clark ripped into “government overreach.”

Tuesday’s announcement is the first collaboration between FTC chair Lina Khan and Assistant Attorney General Jonathan Kanter, two Biden appointees tasked with fulfilling his campaign promise to crack down on decades of monopolistic practices in the U.S. that have allowed companies to get bigger and bigger and threaten economic growth and opportunity. Khan has been a star figure in the movement since she wrote a Yale Law Journal article hammering Amazon’s business practices.

Simply put, Tuesday’s news could set the clock for a merger regime change that would reshape corporate America as we know it, and corporate America is not happy about it.

21st-century enforcement for a 21st-century marketplace

The agencies asked for specific input about how to assess competition in digital markets, when products are free and when companies hold on to large amounts of data. They said they are “particularly interested” in where earlier guidelines “may underemphasize or neglect” certain aspects of competition—things that aren’t tied to price, like quality of goods. 

The agencies also asked for information on how to evaluate startup acquisitions as competitive threats. According to the FTC, tech companies used a “loophole” to avoid official merger reviews over hundreds of deals for small companies that fell just below official reporting thresholds. 

“This study highlights the systemic nature of their acquisition strategy,” FTC chair Khan said of the tech companies at the time. “Digital markets in particular reveal how smaller transactions invite vigilance.”

The Chamber of Commerce said the merger control system isn’t broken and therefore shouldn’t be fixed; of the 780 mergers contested over the past 20 years, said the Chamber, the government has won all but eleven.

“​​By making it harder for startups to be acquired by U.S. companies, jobs will be lost, our economy will be weakened, and our foreign competitors strengthened,” TechNet president and CEO Linda Moore wrote in a statement to Fortune. “We must ensure that investment remains in the U.S. and doesn’t go to places like China that threaten U.S. competitiveness and national security.” 

“The Chamber supports more resources for antitrust enforcement. But changes to antitrust law that would expand enforcement beyond the consumer welfare standard or create shortcuts to rule of reason analysis would harm consumers, our economy, incentives to innovate, and our global competitiveness,” wrote representatives from the Chamber of Commerce. 

Growing monopoly scrutiny

A growing group of enforcers, including Khan, have claimed that the current standards for enforcing antitrust rules are out of date and don’t properly evaluate data accumulation and network effects as a way to monopolize power. 

Khan, the youngest and arguably most progressive head of the FTC in the agency’s 106-year history, has said she hopes to end nearly half a century of relaxed policy toward horizontal mergers that led to the proliferation of tech behemoths with trillion-dollar market caps. Throughout her career, Khan has forged a strong reputation in the antitrust community as a fierce critic of Big Tech’s increasing market dominance and as a defender of America’s anti-monopoly laws. 

Companies like Amazon that take control of the marketplace and make products, can undercut competitors while keeping prices very low, argues Khan. Amazon cross-subsidizes itself, and often forgoes making a profit on products so long as it helps with market dominance. Mergers and antitrust suits are typically evaluated through price increases, which Amazon avoids.

But Amazon has access to consumer data; it has advantages in shipping and warehouse infrastructure; and it is willing to forgo profits to remain dominant, said Khan. 

“My argument is that gauging real competition in the 21st-century marketplace—especially in the case of online platforms—requires analyzing the underlying structure and dynamics of markets,” Khan wrote in her now-famous law school essay. “Rather than pegging competition to a narrow set of outcomes, this approach would examine the competitive process itself.”

The announcement immediately followed news of Microsoft’s $68.7 billion deal to buy video-game maker Activision, suggesting there may be extra scrutiny of that deal on the part of the FTC. It also comes a week after the FTC was given the green light by a federal judge to take Meta to court over various alleged antitrust violations. If the FTC wins that case, Meta could be forced to sell Instagram and WhatsApp. 

The new announcement also comes during a surge in mergers, filings for which doubled between 2020 and 2021, that has left the agency overwhelmed. Owing to a lack of resources, the FTC has warned businesses that it will continue to evaluate some merger deals even after they close.