Justice Department to Open Broad, New Antitrust Review of Big Tech Companies
Justice Department to Open Broad, New Antitrust Review of
Big Tech Companies
Inquiry signals Barr’s deep interest in tech sector,
poses threat to companies such as Facebook, Google, Amazon, Apple
By Brent Kendall Updated July 23, 2019 5:34 pm ET
WASHINGTON—The Justice Department is opening a broad
antitrust review into whether dominant technology firms are unlawfully stifling
competition, adding a new Washington threat for companies such as Facebook
Inc., Google, Amazon.com Inc. and Apple Inc.
The review is geared toward examining the practices of
online platforms that dominate internet search, social media and retail
services, the department said, confirming the review shortly after The Wall
Street Journal reported it.
The new antitrust inquiry under Attorney General William
Barr could ratchet up the already considerable regulatory pressures facing the
top U.S. tech firms. The review is designed to go above and beyond recent plans
for scrutinizing the tech sector that were crafted by the department and the
Federal Trade Commission.
The two agencies, which share antitrust enforcement
authority, in recent months worked out which one of them would take the lead on
exploring different issues involving the big four tech giants. Those turf
agreements caused a stir in the tech industry and rattled investors. Now, the
new Justice Department review could amplify the risk, because some of those
companies could face antitrust claims from both the Justice Department and the
FTC.
The FTC in February created its own task force to monitor
competition in the tech sector; that team’s work is ongoing.
The Justice Department will examine issues including how
the most dominant tech firms have grown in size and might—and expanded their
reach into additional businesses.
The Justice Department also is interested in how Big Tech
has leveraged the powers that come with having very large networks of users,
the department said.
There is no defined end-goal yet for the Big Tech review
other than to understand whether there are antitrust problems that need
addressing, but a range of options are on the table, the officials said. The
inquiry could eventually lead to more focused investigations of specific
company conduct, they said.
The review also presents risks for the companies beyond
whether antitrust issues are identified. The department won’t ignore other
company practices that may raise concerns about compliance with other laws,
officials said.
“Without the discipline of meaningful market-based
competition, digital platforms may act in ways that are not responsive to
consumer demands,” Justice Department antitrust chief Makan Delrahim said in a
statement. “The department’s antitrust review will explore these important
issues.”
Representatives for Facebook, Alphabet, Amazon and Apple
didn’t respond to requests to comment.
In after-hours trading Tuesday, shares for those four
companies were down. Apple was down by about 0.4%, Amazon by about 1.13%,
Alphabet by about 0.96%, and Facebook by about 1.65%.
The Big Tech companies have said they are highly
innovative firms that create jobs and provide products and services that
consumers love. They have said they have rightly won their places atop the tech
pyramid and have to compete fiercely to stay there.
The Justice Department already has been preparing to
probe whether Alphabet Inc. ’s Google is engaging in unlawful monopolization
practices. The Journal earlier reported the department’s plans for that
investigation, whose existence hasn’t been confirmed by the agency.
The department’s antitrust division will conduct both
reviews; it is unknown if and when the two efforts will intersect. On the
broader tech review, the division will work in close coordination with Deputy
Attorney General Jeffrey Rosen, the officials said.
The department appears to be hitting the ground running.
It recently hosted a private presentation where officials heard from critics of
Facebook, including academics, who walked through their concerns about the
social-media giant and advocated for its breakup, according to people familiar
with that meeting. Tech and antitrust observers believed issues related to
Facebook’s dominance were to be handled by the FTC.
Both the FTC and the Justice Department have made clear
that they view tech-sector competition issues as a priority. Under agreements
brokered in recent months between Mr. Delrahim and FTC Chairman Joseph Simons,
the Justice Department obtained clearance to proceed with a probe of whether
Google has engaged in illegal monopolization tactics, as well as jurisdiction
over Apple for similar issues. The FTC, meanwhile, won for itself the right to
explore monopolization questions involving Facebook and Amazon. (The commission
already has undertaken a lengthy consumer-protection investigation of
Facebook’s privacy practices, and the company has agreed to a $5 billion fine.)
Justice Department officials said those agreements
weren’t meant to be open-ended or all-encompassing. But in any case the
department isn’t trying to pre-empt the FTC’s work, they said, and suggested
the two agencies might explore different tech practices by the same company, as
well as different legal theories for possible cases.
The two agencies have been in regular contact at both the
leadership and staff levels to coordinate their efforts, according to a person
familiar with the discussions.
While the top tech firms were once the darlings of the
public, attitudes have shifted as some consumers, and politicians on both the
left and the right, have grown uncomfortable with how much power and influence
they wield in the economy and society.
Some Democratic presidential candidates have called for
the breakup of companies like Google and Facebook, while lawmakers of both
parties have sounded alarm bells, though at times for different reasons. Some
Republicans have voiced concerns about whether tech companies disfavor
conservative voices, claims that industry leaders have denied.
President Trump has escalated his criticisms of Big Tech
recently, openly suggesting the U.S. ought to sue Google and Facebook, comments
that could hang over the Justice Department’s new efforts.
Aside from Justice Department and FTC scrutiny, a House
antitrust subcommittee also is taking a broad look at potential anticompetitive
conduct in the tech sector. Executives from Facebook, Google, Apple and Amazon
all testified before the panel last week.
Seeds for the new Justice Department review were planted in
January at Mr. Barr’s confirmation hearing, when he said that he believed
antitrust issues in the tech sector were important.
“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.”
Justice Department officials said they would use the new
antitrust review to seek extensive input and information from industry
participants, and eventually from the dominant tech firms themselves. It isn’t
yet known whether much of the information-gathering will be done on a voluntary
basis or if companies eventually could be compelled by the government to turn
over materials.
—Ryan Tracy contributed to this article.
Comments
Post a Comment