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Justice Department Opens Antitrust Review of Big Tech Companies Justice Department Opens Antitrust Review of Big Tech Companies
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The federal government has turned its full investigative powers on examining the world’s biggest technology companies, building on a backlash against the industry that has been growing for over a year. The federal government has turned its full investigative powers toward examining the world’s biggest technology companies, building on a backlash against the industry that has been growing for over a year.
The Justice Department said on Tuesday that it would start an antitrust review into how powerful internet companies had accumulated market power and whether they had acted to reduce competition. The announcement follows similar inquiries underway in Congress and at the Federal Trade Commission, which shares antitrust oversight responsibilities with the Justice Department. The Justice Department said on Tuesday that it would start an antitrust review into how internet giants had accumulated market power and whether they had acted to reduce competition. Similar inquiries are underway in Congress and at the Federal Trade Commission, which shares antitrust oversight responsibilities with the Justice Department.
The Justice Department did not name specific companies in a news release announcing its review, but noted that it would look into concerns about search, social media and some retail services — presumably putting Google, Facebook and Amazon on notice. The action is the clearest sign yet that the longtime arguments that helped shield the tech giants from antitrust scrutiny are eroding. Since the 1970s, a consensus in antitrust circles has been that if companies were focused on consumer welfare — for example, by offering low prices — they were not likely to attract federal intervention. Since companies like Google and Facebook largely provide free services, the thinking went, they were not subject to federal antitrust examination.
The pressure on tech giants has ended decades of deferential treatment toward the industry. In Congress, the House Judiciary subcommittee on antitrust is holding hearings and conducting its own investigation of the market power and behavior of the big tech companies. But that approach has evolved, pushed by scholars and others, as concerns about the clout and reach of Google, Facebook, Amazon and Apple have grown. The Justice Department has recently been meeting with tech industry experts to learn what kinds of harm the companies may have caused, said two people with knowledge of the talks, who spoke on the condition they not be identified because the meetings were confidential.
At a hearing last week, with witnesses from Google, Facebook, Amazon and Apple, Representative David Cicilline, chairman of the subcommittee, said that the government stance for too long was to celebrate the new tech economy rather than scrutinize its corporate leaders. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Makan Delrahim, head of the Justice Department’s antitrust division, said in a statement. “The department’s antitrust review will explore these important issues.”
“Congress and antitrust enforcers allowed these firms to regulate themselves with little oversight. “ Mr. Cicilline, Democrat of Rhode Island, said in his opening statement. “As a result, the internet has become increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship.” Attorney General William P. Barr himself has plunged into the conversation about tech power. On Tuesday, he said in a speech in Manhattan that tech companies should stop using advanced encryption and other security measures that effectively turn devices into “law-free zones,” essentially criticizing Apple and its iPhones without naming them.
On Tuesday, Mr. Cicilline sent letters to three of the companies at last week’s hearing — Google, Facebook and Amazon. He is seeking answers to questions posed at the hearing, but not directly addressed by the witnesses. Mr. Cicilline characterized those earlier replies as “evasive, incomplete or misleading.” In announcing its review, the Justice Department did not name specific companies, but said it would look into concerns about search, social media and some retail services — presumably putting Google, Facebook and Amazon on notice.
In announcing the review, the Justice Department said it would look into whether the internet companies were “harming consumers.” For most of the last four decades, U.S. courts and regulators have interpreted the consumer harm standard of antitrust to mean that company behavior led to higher prices, but it’s challenging to make that argument when services like Google and Facebook are free and Amazon is celebrated for low prices and convenient delivery. The Justice Department declined to comment beyond its announcement; Google and Facebook also declined to comment. Amazon did not immediately respond to a request for comment. Apple referred to comments made by Timothy D. Cook, its chief executive, in a recent television interview with CBS News.
This latest review comes on the heels of the Justice Department and the Federal Trade Commission splitting up potential antitrust investigations into Facebook, Google, Amazon and Apple. It’s not clear how this review will differ from the investigations into the individual companies. “I think we should be scrutinized,” Mr. Cook said at the time. “But if you look at any kind of measure about ‘is Apple a monopoly or not,’ I don’t think anybody reasonable is going to come to the conclusion that Apple’s a monopoly.”
Google and Facebook declined to comment. Amazon did not immediately respond to a request for comment. The Justice Department’s review may not lead to full-blown investigations of the companies. But the timing of the announcement ratchets up pressure on the tech giants. Across Washington in recent weeks, lawmakers and regulators have united to raise questions about Facebook, Google, Amazon and Apple.
Apple referred to comments made by Tim Cook, the company’s chief executive, in a recent television interview on CBS News. This month, the F.T.C. voted to fine Facebook about $5 billion for mishandling users’ personal information, by far the agency’s largest fine against a tech company. An official announcement of a settlement is expected as soon as Wednesday.
“I think we should be scrutinized,” Mr. Cook said. “But if you look at any kind of measure about ‘is Apple a monopoly or not,’ I don’t think anybody reasonable is going to come to the conclusion that Apple’s a monopoly.” Last week, Facebook faced lawmakers over two days of grilling for a new cryptocurrency initiative called Libra. Google was at the center of a Senate subcommittee hearing about censorship in search. And at a separate House hearing, with witnesses from Google, Facebook, Amazon and Apple, Representative David Cicilline, a Democrat of Rhode Island who leads a subcommittee on antitrust law, said that the government stance for too long was to celebrate the new tech economy rather than scrutinize its corporate leaders.
While the major American technology companies have largely avoided antitrust scrutiny at home, they have been investigated more aggressively around the world, especially in Europe. “Congress and antitrust enforcers allowed these firms to regulate themselves with little oversight,” Mr. Cicilline said. “As a result, the internet has become increasingly concentrated, less open and growingly hostile to innovation and entrepreneurship.”
On Tuesday, Mr. Cicilline sent letters to three of the companies at last week’s hearing — Google, Facebook and Amazon. He said he was seeking answers to questions that the witnesses were asked but did not directly answer. Mr. Cicilline characterized those earlier replies as “evasive, incomplete or misleading.”
The Justice Department has stepped up its consideration of tech companies since May, said one person with knowledge of the discussions. Around then, the Justice Department and the F.T.C. split up potential antitrust investigations into Facebook, Google, Amazon and Apple, this person said.
The review announced on Tuesday is a separate and next step beyond those moves with the F.T.C., this person added. In recent weeks, antitrust and tech policy experts have more frequently visited the Justice Department as it sought to understand harms the tech companies may have created. It has not yet settled on a theory of harm, this person said. In announcing its review, the Justice Department said it would look into whether the internet companies were “harming consumers.”
Sam Weinstein, a former antitrust official at the Justice Department, said the announcement was unusual because the agency tends to keep its work, usually investigations, under wraps.
Mr. Weinstein, a professor at Yeshiva University’s law school, said the Justice Department could be signaling it wants to respond to concerns about the growing power of tech giants and to let their competitors know that the door is open for complaints.
“There is a lot of criticism of the agencies that they are not doing enough about big tech and this is a way to respond to that criticism,” he said.
While the major American tech companies have largely avoided antitrust scrutiny at home, they have been investigated more aggressively around the world, especially in Europe.
In March, European authorities fined Google 1.5 billion euros — about $1.7 billion — for antitrust violations in the online advertising market. The regulators said Google had violated antitrust rules by imposing unfair terms on companies that used its search bar on their websites in Europe. The fine was the third against Google by the European Union since 2017.In March, European authorities fined Google 1.5 billion euros — about $1.7 billion — for antitrust violations in the online advertising market. The regulators said Google had violated antitrust rules by imposing unfair terms on companies that used its search bar on their websites in Europe. The fine was the third against Google by the European Union since 2017.
The United States, by contrast, has been seen as a lesser force in antitrust enforcement recently, with the Justice Department and Federal Trade Commission moving more cautiously. The United States, by contrast, had been seen as a lesser force in antitrust enforcement recently, with the Justice Department and F.T.C. moving more cautiously.
“If the United States does not step up, competition policy will be set elsewhere,” said William Kovacic, a law professor at George Washington University and a former chairman of the Federal Trade Commission. “If the United States does not step up, competition policy will be set elsewhere,” said William Kovacic, a law professor at George Washington University and a former chairman of the F.T.C.
This is a developing story and will be updated.