The Justice Department is launching a sweeping antitrust review into whether the nation’s biggest online platforms are reducing competition or stifling innovation, a development that threatens to heighten the risks for Silicon Valley in the ballooning Washington scrutiny of the power wielded by companies like Google and Facebook.
The news landed on the eve of an expected announcement Wednesday by the Federal Trade Commission — the other federal agency with a big role in antitrust enforcement — of a $5 billion settlement with Facebook for alleged privacy violations. But if the FTC agreement offered a chance for Facebook to move past a lengthy probe into its handling of users’ data, the Justice Department’s announcement Tuesday showed that the legal troubles may be just beginning for the social media company and its peers.
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The DOJ’s antitrust division was vague about its plans, saying it will look into “the widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online.” The release doesn’t mention Google, Facebook and Amazon by name but says antitrust officials are seeking information from “industry participants who have direct insight into competition in online platforms.” All three companies, along with Apple, were the subject of a House antitrust hearing just last week.
“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.”
Massachusetts Sen. Elizabeth Warren, a Democratic presidential hopeful who has called for breaking up big tech companies, said she supports a “legitimate antitrust investigation” but also sounded a note of caution about DOJ’s plans.
“But we should be wary that this administration doesn’t abuse this necessary review in order to pursue its own partisan agenda,” Warren said via Twitter. “This issue is too important to be dragged into Trump’s petty grievances against these companies. This requires careful congressional oversight.”
President Donald Trump, who has railed against tech companies over allegations of anti-conservative bias, said at a recent White House summit on social media that he is directing his administration to “explore all regulatory and legislative solutions to protect free speech and the free speech rights of all Americans.”
GOP Sen. Marsha Blackburn of Tennessee, a close Trump ally, cheered the DOJ news on Twitter, adding that she plans to discuss “how to foster free markets and competition” at the next meeting of a Senate Judiciary tech task force she’s leading. The bipartisan group is probing an array of issues related to Silicon Valley companies, including privacy, competition and the anti-conservative bias allegations, for which there’s no clear evidence and which the tech companies have denied.
Lawmakers of both parties have already slammed the proposed FTC settlement, which the commission is expected to formally unveil Wednesday after getting DOJ’s sign-off. Critics from both parties have noted that Facebook’s annual revenue dwarfs the known $5 billion penalty and cited reports that the FTC opted against punishing conditions like making Facebook stop sharing data with third parties.
Facebook’s stock price rose when news of the proposed fine leaked earlier this month — but sagged slightly in after-hours trading Tuesday following news of the DOJ’s probe.
Tuesday’s news also raised questions about a recent agreement in which the Justice Department and the FTC divvied up jurisdiction of major tech companies, laying the groundwork for potential DOJ probes into whether Google or Apple constitute monopolies and FTC investigations into the same for Facebook and Amazon.
The newly announced investigation appears to be an even broader review of the competitive impact of the country’s biggest tech companies. The review raises the stakes for the companies, especially Facebook and Amazon, because the FTC’s claim of jurisdiction over monopolization concerns could result in dual federal antitrust probes for those two firms.
The House Judiciary Antitrust, Commercial and Administrative Law Subcommittee also has its own antitrust investigation into the country’s largest tech companies. After a hearing in the panel last week, subcommittee Chairman David Cicilline (D-R.I.) kept the heat on Tuesday by questioning the truthfulness of the testimony from the Google, Facebook and Amazon witnesses.
Facebook and Amazon representatives did not immediately respond to requests for comment on the DOJ’s announcement.
A Google spokesperson referred a request for comment to testimony by Adam Cohen, Google director of economic policy, at last week’s House hearing.
“We have helped reduce prices and expand choice for consumers and merchants in the U.S. and around the world,” Cohen said in his testimony. “We have created new competition in many sectors, and new competitive pressures often lead to concerns from rivals.”
The DOJ’s announcement was unusual in that the department announced it, in contrast to the agency’s usual practice of not publicizing investigations when they’re launched, said Charlotte Slaiman, the competition policy counsel for the watchdog group Public Knowledge.
“The fact that he’s making this statement I think probably indicated they’re planning to take it seriously,” Slaiman said. “You’d be hard pressed, once you make a statement like this, to not do a thorough job.”