Silicon Valley’s antitrust troubles in Washington got real this week, as it became clear that every possible entity in the U.S. is pursuing investigations that could fuel attempts to break up the nation’s biggest tech companies.
But the confluence of probes raises a host of challenges during the coming weeks and months for the investigators, which include people from the Justice Department and Federal Trade Commission, both chambers of Congress and several state attorneys general.
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Much of what happens next will occur behind closed doors, as investigators meet privately with players from the array of industries that the online companies have disrupted — a list that by now includes media publishers, phone and cable companies, brick-and-mortar retailers and even smaller competitors from the tech world. Any company receiving formal notice that it is under investigation will have to disclose it in a public filing to regulators, as Facebook did this week.
Enforcers will have to assess not only whether any of the tech companies is flouting the law, but whether it’s possible to prove in court that the conduct is harming consumers, even though the businesses in question offer products and services that are wildly popular and often free of charge.
That means the agencies are entering uncharted territory — it’s been decades, at least, since such a wide array of major powers across an entire industry have faced this kind of antitrust scrutiny all at once. But with their actions this week, Washington’s biggest antitrust enforcers have sent a signal that they want to hear complaints. And odds are there will be many.
“The core question now is which cases” to pursue, said Roger McNamee, an early Facebook investor turned critic who delivered a speech to the DOJ antitrust division in March. “Now that the government has committed itself to protecting the consumer interest, it will be fascinating which cases they pursue and which companies find themselves in the crosshairs.”
Antitrust enforcers across Washington have met in both D.C. and Silicon Valley with industry critics in recent months as they search for anticompetitive behavior that would merit a formal investigation. Those critics have included smaller tech companies like the online review site Yelp, along with advocacy groups and tech whistle-blowers such as Facebook co-founder Chris Hughes, who has advocated breaking up the company he helped start.
Attorney General William Barr also convened a bipartisan group of state attorneys general at DOJ headquarters Thursday to talk antitrust enforcement prospects, where participants said one focus of the conversation was Google. The meeting occurred two days after Justice Department antitrust chief Makan Delrahim announced a broad investigation into whether Facebook, Google and Amazon are engaging in behavior that stifles competition or harm consumers.
Separately, Facebook disclosed in a corporate filing Wednesday that the FTC opened a new investigation into the company last month. The probe involves “social networking or social media services, digital advertising, and/or mobile or online applications,” the company said the following day.
Mounting pressure in Washington from both political parties to put the internet companies under a microscope may have ignited the “healthy rivalry” that exists between the Justice Department and the FTC, former agency officials and antitrust observers said.
FTC spokesperson Betsy Lordan said that for decades the two agencies have made sure not to launch duplicative investigations, though they could investigate the same companies for different types of conduct. She declined to comment on any ongoing investigations. The DOJ did not respond to requests for comment.
Some antitrust experts have warned that it could be hard to win cases against online companies based on the traditional legal standards — enforced for decades by federal judges — that have looked to metrics such as rising prices to prove anticompetitive harm to consumers. Google and Facebook in particular offer users their major services for free.
Delrahim has floated the idea of altering that yardstick, saying in a widely noted speech last month in Israel that antitrust law could also show consumers are suffering harm such as “less free speech” and “lower privacy protections.” But that could be a hard argument to sell to a federal court, former DOJ antitrust enforcer Robert Litan said in an interview.
“It would be a very unconventional use of the antitrust laws to go after it, and it would be an entirely novel claim,” said Litan, who was principal deputy assistant attorney general in the department’s antitrust division during the Clinton administration. “A judge would never have seen such a claim. But maybe they’re trying to make new law.”
The big tech companies have rejected the notion that they are monopolies or anti-competitive bullies — on the contrary, representatives from Google, Facebook, Amazon and Apple told a House antitrust panel this month that their companies face stiff competition in their respective markets. Facebook, for example, competes with Apple and Snapchat as a messaging platform, while Apple notes that its iOS smartphone platform lags in the market behind Google’s Android.
In his speech in Israel, Delrahim noted that some digital markets like search, social media and e-commerce have just one or two dominant players.
The DOJ investigation got mixed response among tech critics on Capitol Hill, with some Democrats skeptical that the Trump administration would take meaningful steps.
“The rhetoric has to be matched by real action,” Sen. Richard Blumenthal (D-Conn.) told POLITICO. “Big tech’s bigness is not a violation of law, but its misuse of its monopoly power has been and will continue to be illegal and anti-consumer, so I hope some action will be forthcoming.”
The probe received a much warmer welcome from prominent GOP tech critics. Sen. Josh Hawley (R-Mo.), who asked Barr during his January confirmation hearing whether he would take a tougher stance against tech companies, lauded him this week for “following through” on ratcheting up oversight of the sector. “Very big news and very important,” he wrote on Twitter.
Former DOJ officials characterized the public announcement of the antitrust probe as unusual for a government agency that typically refuses to comment on pending or ongoing investigations. But in an era when questions about the market dominance of platforms are coming from both President Donald Trump and his 2020 Democratic rivals, the pressure is on.
“It could boil down to the simple fact because others have put these companies in the spotlight they feel the need to reassure those stakeholders, be it consumers or office holders, that the DOJ takes those concerns seriously,” a former agency official said.
And the investigation brings DOJ in line with other Washington power players looking to drop a hammer on major technology companies. Trump rebuked two of them publicly Friday, declaring on Twitter that Apple won’t get any waivers from tariffs on parts it imports from China and that Google’s relationship with Beijing “may or may not” pose “National Security concerns.”
The FTC, which slapped Facebook with a record $5 billion fine for privacy infractions, has also made it clear that its work is far from done.
The Commission’s Bureau of Competition established a 17-attorney tech task force earlier this year that is aimed at probing competition concerns in online markets. The task force’s leaders gathered complaints and insights about the industry’s behavior during a weeklong tour in Silicon Valley in May, POLITICO previously reported.
Meanwhile, House antitrust subcommittee Chairman David Cicilline (D-R.I.) has begun a series of hearings to explore anticompetitive behavior in the tech industry. And in the Senate, Marsha Blackburn (R-Tenn.) has created a task force to examine antitrust, privacy, speech moderation and other qualms Washington has with Silicon Valley. Hughes and Yelp CEO Jeremy Stoppelman, a Google critic, have met with both of their offices, POLITICO previously reported.
Hughes has also joined law professors Tim Wu and Scott Hemphill in meetings with the Justice Department, FTC and state attorneys general to discuss Facebook’s market power, The New York Times reported this week.
Enforcers have also met with Barry Lynn, executive director of the Open Markets Institute, a liberal think tank that has spent years advocating tougher antitrust enforcement against companies like Google. Lynn argues that strong antitrust action can alter the digital business models that have given rise to issues like disinformation — though companies like Facebook and Google contend those issues are best tackled with artificial intelligence technology and human moderators.
“That’s something that is really fundamentally important for democracy,” Lynn said. “It’s something competition policy enforcers can absolutely have a major hand in fixing.”
Cristiano Lima and Margaret Harding McGill contributed to this report.