Big tech facing antitrust review
U.S. to investigate whether major companies stifle competition, harm consumers
The Department of Justice confirmed Tuesday that it has opened a wide-ranging antitrust review of tech giants and whether they are thwarting competition, raising the stakes for Silicon Valley just days after congressional hearings into the industry’s influence.
Although the government did not name names in its announcement, the “market-leading online platforms” in search, social media and retail that it referred to are widely understood to be Apple,
Google, Facebook and Amazon.
The DOJ said it will review whether the big online platforms have engaged in practices that have harmed consumers, reduced competition or stifled innovation.
It will seek input from consumers and the companies’ rivals.
“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Makan Delrahim, assistant attorney general of the DOJ’s antitrust division, said in a statement Tues
“Without the discipline of meaningful marketbased competition, digital platforms may act in ways that are not responsive to consumer demands.” — Makan Delrahim, assistant attorney general of the DOJ’s antitrust division
day. “The Department’s antitrust review will explore these important issues.”
The announcement came as no surprise. The tech giants have faced growing backlash and increased scrutiny from regulators, lawmakers, consumer advocates and even current and former employees over their collection and use of consumer data, failing to police content and exploitation by Russian agents of their platforms during the 2016 election. Last month, some publications reported that the DOJ and the Federal Trade Commission had divided up the work of scrutinizing the companies, with the FTC supposedly handling Facebook and Amazon, and the DOJ getting Google and Apple.
Confirmation of the Justice Department’s review comes just before the FTC’s expected announcement today of a settlement with Facebook over its handling of user data, an agreement that is expected to include a recordsetting $5 billion fine against the company. The FTC this week may also announce a settlement with YouTube, the video-sharing site owned by Google, over its collection of data from children.
Jeff Chester, executive director of the Center for Digital Democracy, an advocacy group that has pushed to rein in big tech, said the U.S. has “a terrible track record when it comes to curtailing the clout of the major digital companies.”
But Chester added: “This is a unique moment, however, where critics from both sides of the aisle, such as Sens. (Elizabeth) Warren and (Josh) Hawley, are leading a charge to break up or tightly regulate” the companies. Warren was the first Democratic presidential candidate to call for breaking up big tech. Hawley, a Republican from Missouri, has been vocal about tech issues from privacy to conservatives’ allegations that the platforms are biased against them, a view President Donald Trump has also expressed.
Both House and Senate subcommittees have also been focused on the big tech companies. The House Judiciary Committee last month announced its own investigation of digital competition. Meanwhile, the Senate Judiciary antitrust subcommittee has scheduled an oversight hearing with the FTC and the Justice Department for Sept. 17 at which it is expected to question the regulators about tech’s power, Politico reported Tuesday. Members of that committee have been critical of the agencies’ oversight of tech companies.
Some experts have said it may be tough for the government to go after big tech under existing antitrust laws because it would have to prove that consumers are being harmed. Donald Polden, professor emeritus of law at Santa Clara University, points out, for example, that the tech giants’ customers aren’t paying higher prices.
In addition, antitrust reviews can take a long time. When the U.S. government brought its antitrust lawsuit against Microsoft in 1998, a judge issued a decision the following year and ordered a breakup of the company in 2000. Microsoft appealed, and the case ended in 2001 with the DOJ seeking a lesser penalty that fell short of breaking up the software giant.
Shares of Google, Facebook, Amazon and Apple, all based in Silicon Valley except Amazon, fell in after-hours trading.
Analysts for Wedbush Securities said Tuesday that they expected short-term “headline risk” to the tech giants’ stocks, but that without changes to the antitrust laws, “ultimately, we expect a ‘no harm, no foul’ outcome.”
Apple, Facebook and Amazon did not return requests for comment.
When reached Tuesday, a Google spokeswoman referred to the testimony of Adam Cohen, its director of economic policy, before the House Judiciary Committee last week. Cohen told lawmakers that Google has helped reduce prices and expand choices for consumers.