States to launch Google, Facebook antitrust probes
State attorneys general are formally launching separate antitrust probes into Facebook Inc. and Alphabet Inc.’s Google unit starting next week, according to people familiar with the matter, putting added pressure on tech giants already under federal scrutiny.
The Google probe is expected to be announced at a news conference outside the U.S. Supreme Court on Monday, with a bipartisan group of about three dozen state attorneys general joining the effort, the people said.
The investigation will be led by Texas Attorney General Ken Paxton, a Republican, the people said.
The attorneys general will examine the impact of Google on digital advertising markets, this person said, as well as potential harms to consumers from their information and ad choices being concentrated in one company.
Separately, an overlapping bipartisan group of attorneys general led by New York Attorney General Letitia James, a Democrat, is organizing a probe into social media company Facebook, according to these people.
“We continue to engage in bipartisan conversations about the unchecked power of large tech companies,”
Ms. James said in a statement to The Wall Street Journal when asked for comment on the probe. “The attorneys general involved have concerns over the control of personal data by large tech companies and will hold them accountable for anticompetitive practices that endanger privacy and consumer data.”
Facebook recently agreed to shell out $5 billion (U.S.) to settle Federal Trade Commission allegations that it repeatedly used deceptive disclosures and account settings to lure users into sharing personal information, and remains under federal scrutiny for issues including whether it acquired companies such as Instagram to stave off competition.
Facebook declined to comment.
Google, which is facing a Justice Department antitrust probe, said it is cooperating with the inquiries.
“Google’s services help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country,” said Google spokesman Jose Castañeda. “We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector.”
The action by the attorneys general, which has been anticipated for weeks, could possibly be expanded to other companies beyond Google and Facebook, some of the people said.
Public opinion polls suggest Americans are increasingly growing disenchanted with tech companies, in particular social media platforms, even as they remain hooked on their services.
One of the main concerns among regulators, lawmakers and states attorneys general is the dominant role a handful of big tech companies have in commerce and communications.
“The extreme concentration in the technology industry is bad for the consumer, and in our opinion it’s bad for America,” Tennessee Attorney General Herbert Slatery III said at a June hearing on antitrust concerns in the tech industry, flanked by two other state attorneys general. “The concentration has stifled innovation with market distortions [in] research and development, as entrepreneurs avoid competing with Google and Facebook and other tech giants. So we need to do something about that.”
For now, it appears unlikely the state and federal investigations will be formally coordinated. But the federal enforcers have been meeting with state attorneys general, and closer cooperation could develop as the probes move forward.
“The FTC values our cooperative relationship with the AGs and routinely coordinates on tech and antitrust issues,” a spokeswoman for the FTC said. The Justice Department didn’t immediately respond to a request for comment.
The participation of so many attorneys general of both parties in the probe is potentially worrisome for the big tech companies. About 20 attorneys general were involved in the federal government’s last major tech antitrust case, against Microsoft Corp., two decades ago.
Microsoft eventually agreed to an array of conditions in that case, including making the Windows platform more accessible to third-party software developers.
At a minimum, the attorneys general’s involvement this time is sure to add complexity and cost for the companies. For instance, the state attorneys are often able to extract large fines in antitrust cases, in circumstances where federal enforcers can’t.
The involvement of the attorneys general also lends a bipartisan gravitas to the antitrust probes, making it harder for the companies to attack them as politically motivated.
At the same time, the state attorneys will face the challenge of coordinating complex investigations among so many offices. Some attorney general offices, particularly in smaller states, also lack the personnel and resources to throw into the demanding job.