Justice Department Is Preparing Antitrust Investigation of Google
Justice Department Is
Preparing Antitrust Investigation of Google
Probe would closely
examine Google’s practices related to search, other businesses
By Brent Kendall and John
D. McKinnon Updated May 31, 2019 9:58 p.m. ET
WASHINGTON—The Justice
Department is gearing up for an antitrust investigation of Alphabet Inc.’s
Google, a move that could present a major new layer of regulatory scrutiny for
the search giant, according to people familiar with the matter.
The department’s antitrust
division in recent weeks has been laying the groundwork for the probe, the
people said. The Federal Trade Commission, which shares antitrust authority
with the department, previously conducted a broad antitrust investigation of
Google but closed it in 2013 without taking action, though Google made some
voluntary changes to certain business practices.
The FTC and the department
have been in talks recently on who would oversee any new antitrust
investigation of a leading U.S. tech giant, and the commission agreed to give
the Justice Department jurisdiction over Google, the people said.
With turf now settled, the
department is preparing to closely examine Google’s business practices related
to its search and other businesses, the people said.
It couldn’t immediately be
learned whether Google has been contacted by the department. Third-party
critics of the search giant, however, already have been in contact with Justice
Department officials, some of the people familiar with the matter said.
Officials with the Justice
Department and Google didn’t immediately respond to requests for comment. An
FTC spokeswoman declined to comment.
A Justice Department
investigation would put Google—and potentially other tech giants—in an unwanted
spotlight at a time when major internet companies already have seen their
political fortunes turning, both in the U.S. and overseas.
The shift in attitudes has
included multibillion-dollar antitrust fines for Google from the European
Union. Facebook Inc. has come under intense fire over Russian meddling in the
2016 election on its service. Policy makers also are increasingly skeptical of
internet companies’ privacy practices, as well as the potential to create other
public harm.
Alphabet, Google’s parent,
typically is ranked among the world’s five largest firms by market
capitalization. It has grown, thanks largely to its powerful position in online
advertising, a lucrative market that threatens to eclipse other forms of
advertising. Along with Facebook, it has become a major player in the complex
market. But other firms—notably Amazon.com Inc. —also have begun to compete for
the business, raising competitive concerns for Google.
Increasingly, U.S. leaders
have begun to question the size and dominance of some of the tech giants.
Sen. Elizabeth Warren (D.,
Mass.), a presidential candidate, called for the breakup of the nation’s top
tech companies earlier this year, sending tremors through the large field of
Democratic contenders for 2020 and winning praise from populist liberal
activists—as well as from Steve Bannon, a former strategist for President
Trump.
The rise of big tech has
seen three corporate titans that didn’t exist 30 years ago—Amazon, Google, and
Facebook—suddenly amassing the power to sway large parts of the U.S. economy
and society, from the stock market to political discourse, from personal
shopping habits to how small businesses sell their wares.
With their enormous size
and dominance have come network advantages, data caches and economies of scale
that can make it challenging for new rivals to succeed. Many firms that compete
with those giants in one sector also depend on their platforms to reach
customers, and they complain of being unfairly squeezed.
Supporters of the big tech
companies say there is so much dynamism in the sector that the giants are sure
to be knocked off soon. However, their power and reach keep growing.
Antitrust leaders at the
Justice Department and the FTC have publicly acknowledged the competition
concerns and said those issues merit close attention.
Justice Department
antitrust chief Makan Delrahim has said there is nothing wrong with a large
tech firm winning its dominance through innovation, but he has said companies
must compete fairly to achieve and maintain their position.
“Antitrust enforcers may
need to take a close look to see whether competition is suffering and consumers
are losing out on new innovations as a result of misdeeds by a monopoly
incumbent,” Mr. Delrahim said last year in a speech about digital platforms at
the University of Chicago.
U.S. Attorney General
William Barr, Mr. Delrahim’s boss, voiced similar sentiments during his
confirmation hearings in January.
“I don’t think big is
necessarily bad, but I think a lot of people wonder how such huge behemoths
that now exist in Silicon Valley have taken shape under the nose of the
antitrust enforcers,” Mr. Barr told senators. “You can win that place in the
marketplace without violating the antitrust laws, but I want to find out more
about that dynamic.”
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