States to Move Forward With Antitrust Probe of Big Tech Firms

States to Move Forward With Antitrust Probe of Big Tech Firms

Investigation would put additional scrutiny on an industry already under a federal spotlight

By John D. McKinnon and   Brent Kendall Updated Aug. 19, 2019 9:56 pm ET
WASHINGTON—A group of states is preparing to move forward with a joint antitrust investigation of big technology companies, according to people familiar with the situation, adding another layer of scrutiny to an industry already under a federal spotlight.
The effort involving state attorneys general is expected to be formally launched as soon as next month, the people said. It is likely to focus on whether a handful of dominant technology platforms use their marketplace powers to stifle competition.
As part of the probe, the states are likely to issue civil investigative demands, similar to subpoenas, to tech companies and other businesses, the people said.
The new investigation could dovetail with plans by the Justice Department, which last month announced its own antitrust review that will focus on tech companies including Alphabet Inc. ’s Google unit and Facebook Inc., the people familiar with the plans said.
The specific number of states that might join the investigation couldn’t be learned, though one person familiar with the effort said up to 20 or more may participate.
Google, Facebook, Inc. and Apple Inc., four companies likely to be a focus of the new investigation, all declined to comment. The companies generally say they operate fairly and don’t engage in anticompetitive behavior.
The Wall Street Journal reported in June that a number of attorneys general were considering a probe into big tech companies. As that effort moved toward a formal investigation, representatives of about a dozen state attorneys general, including Republicans and Democrats, met with top Justice Department officials in Washington in July to discuss concerns about lack of competition in the tech industry, according to people familiar with the meeting.
The political makeup of the multistate group isn’t set. A bipartisan probe could give the investigation broader leverage and help insulate GOP officials from questions over whether their actions are motivated by political concerns, such as how online platforms treat conservative speech.
“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,” said a spokesman for New York Attorney General Letitia James, a Democrat.
A spokeswoman for North Carolina Attorney General Josh Stein, a Democrat, said he is “participating in bipartisan conversations about this issue.” Mississippi Attorney General Jim Hood, also a Democrat, said in a statement he continues “to be concerned with the aggregation of data in the hands of a few and [I] am always watchful of any monopoly.”
Texas Attorney General Ken Paxton, a Republican, put out a statement after last month’s meeting saying that he and other attorneys general discussed “the real concerns consumers across the country have with big tech companies stifling competition on the internet.”
The expected state investigation would add a third major layer of scrutiny for the tech sector. In addition to the Justice Department probe, the Federal Trade Commission is investigating antitrust concerns at Facebook, including the company’s acquisition of nascent tech companies, as well as competitive issues elsewhere in the tech industry.
The involvement of state attorneys general could add to complexity and cost for the companies. These officials were a driving force in the landmark joint state-federal antitrust case against Microsoft Corp. two decades ago. Microsoft agreed to an array of conditions, including making the Windows platform more accessible to third-party software developers.
But the states eventually splintered over whether to accept a settlement. Some experts say their involvement expanded and extended the legal battle, at times significantly.
The Justice Department and the FTC earlier this year reached detailed arrangements for reviewing not only Google and Facebook, but also and Apple. It is possible that some of these big-four tech giants could receive scrutiny from multiple antitrust agencies.
Asked for comment, a Google spokeswoman referred to congressional testimony last month by Adam Cohen, its director of economic policy, who said the internet search and advertising giant has “helped reduce prices and expand choice for consumers and merchants in the U.S. and around the world.”
At the same hearing, Facebook’s director of public policy, Matt Perault, said the social-media king “faces intense competition for all of the products and services that we provide.”
Representatives of Apple and Amazon echoed those comments at the hearing, each saying their businesses compete against well-established rivals.
Regulators, lawmakers and legal experts, however, worry that significant slices of the high-tech marketplace have become uncompetitive. Those include advertising, search, social media, app sales and certain retail sectors, among others.
The recent meeting between state attorneys general and the Justice Department was attended by Attorney General William Barr, Deputy Attorney General Jeffrey Rosen and Assistant Attorney General Makan Delrahim, who heads the department’s antitrust division, people familiar with the matter said.
State and federal officials made a general commitment to work together and may formally join forces, the people said. Joint concerns include tech firms’ data-fueled growth and the resulting difficulty would-be rivals face in entering their markets.
A Justice Department spokesman declined to comment.


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