At an event in San Francisco, Google suggests that new hardware is on the way. — AFP Relaxnews
WASHINGTON: Federal antitrust enforcers and lawmakers are poised to scrutinize the nation’s largest technology companies for potential anticompetitive practices, bringing a new regulatory focus to the vast markets for digital services and a new level of concern for investors.
After years when the government took a broadly laissez-faire attitude toward the regulation of Silicon Valley, antitrust officials at the Justice Department and Federal Trade Commission are choosing lanes with a view to studying the practices of at least four of the world’s largest and highest-profile tech companies.
Under a series of arrangements between the two agencies, the Justice Department now has authority over any potential antitrust investigation into Alphabet Inc.’s Google and Apple Inc., while the FTC has oversight of Facebook Inc. and Amazon.com Inc. Google and Facebook appear to be closest to being in the agencies’ investigative crosshairs, according to people familiar with the matter.
Separately, the House Judiciary Committee made public its own investigation Monday into competition in digital markets, which will include multiple hearings along with requests for information to the major businesses, the panel said. In addition to any competitive problems in digital markets, the probe will look at whether current antitrust laws and enforcement efforts have kept pace with technological change.
The moves among government enforcers and lawmakers over the same broad issues, and the prospect of prolonged scrutiny, rattled investors in the companies, which are all among the biggest in the world by market value.
Facebook shares slid 7.5% Monday while Alphabet lost 6.1%. The selling pulled the Nasdaq Composite Index into correction territory, or 10% below its May record close.
It is too early to assess whether these early moves in Washington will fundamentally alter the companies. But they mark a new level of concern over a sector that prided itself in the past in staying out of the political spotlight.
“The open internet has delivered enormous benefits to Americans,” said Rep. Jerrold Nadler (D., N.Y.), chairman of the Judiciary Committee. “But there is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content and communications.”
The Wall Street Journal reported Friday that the Justice Department was gearing up for a probe of Google and on Monday that the FTC is in the driver’s seat for scrutiny of Facebook, the result of a recently brokered deal between the two agencies. It couldn’t be determined whether the allocations of Apple and Amazon were related to the same agreement; these companies may be a less urgent focus of the agencies, according to people familiar with the matter.
The big technology companies have ramped up dramatically in Washington with lawyers and lobbyists to handle a moment that has been brewing for some time.
The internet industry—Google, Facebook and Amazon in particular—poured money into lobbying in the capital at a record pace in 2018. The industry total reached $77.9 million, compared with $16.4 million a decade earlier, according to the nonpartisan Center for Responsive Politics. Google parent Alphabet alone spent $21.7 million in 2018, while Amazon came in at $14.4 million and Facebook at $12.6 million.
Tech industry investments in think tanks and other nonprofits in the antitrust space also have ticked up in recent years. Google recently funded more than 30 nonprofit groups that have a voice in the public debate over antitrust, according to Google’s transparency report. Those groups include major think tanks on the left and center left, as well as numerous conservative and libertarian groups and institutions. Amazon funds many of the same groups, according to its investment list.
The FTC already had been increasing its scrutiny of the tech companies in recent months, including with a task force, announced in February, to examine competition issues in the technology marketplace. FTC officials have said that, among other things, the task force would re-evaluate past government decisions that allowed major tech companies to acquire smaller companies that potentially could have been future competitors.
Among prior deals on the FTC’s radar are Facebook’s acquisitions of messaging service WhatsApp and photo-sharing app Instagram, people familiar with the matter said.
The FTC’s actions come as consumer advocates—as well as some politicians—have begun urging that big tech companies, including Facebook, be broken up.
But some technology advocates argue that cracking down on the industry could hurt consumers as well as the economy, stifling innovation and growth.
The divvying up of Big Tech jurisdiction comes as antitrust enforcers, including Justice Department antitrust chief Makan Delrahim and FTC Chairman Joe Simons, have expressed an eagerness to explore issues related to how Silicon Valley giants have changed the competitive landscape. With a handful of tech titans amassing the power to sway large parts of the economy and society, the public conversation over antitrust enforcement has shifted, with politicians, policy makers and academics across the ideological spectrum calling for a more aggressive approach.
“It makes sense for the antitrust authorities to look in places where there might be significant market power, to ensure that such firms compete on the merits—and that might include some of the significant high-tech platforms,” Mr. Simons said in a Georgetown University speech last September.
“This is something that is a priority for us,” he told a Senate antitrust subcommittee a week later.
The FTC already has spent more than a year investigating Facebook on privacy issues related to how it handles users’ data. That probe, however, doesn’t focus on antitrust questions of whether Facebook is stifling competition in the digital realm. The fact that the commission formally secured jurisdiction on those issues suggests it is considering even more rigorous scrutiny of the social media giant.
As with Facebook, the FTC has experience with Amazon, the dominant online internet retailer. The FTC generally handles oversight of antitrust issues in the retail industry and was the agency that allowed Amazon to buy Whole Foods Market in 2017.
Likewise, the Justice Department has a history with Apple. The department previously brought a civil case against the company for allegedly conspiring to fix prices on e-books, a case Apple lost. The company had to pay $400 million to consumers.
The Justice Department also reached a settlement with Apple, Google and other tech companies in 2010 to resolve allegations they had agreed not to compete for each other’s workers.
Spokeswomen for the FTC, Amazon and Apple declined to comment. Facebook had no immediate comment. The Justice Department didn’t immediately respond to a request for comment.
Jurisdictional agreements between the FTC and Justice Department don’t assign one agency the right to oversee one company for all purposes. Instead, the two antitrust agencies clear each other to work on specific issues. In the past, both the FTC and Justice Department, for example, have conducted oversight of issues related to Google and Amazon. - WSJ
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