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US Justice Department to launch expansive new investigation into big tech firms
According to the Wall Street Journal (WSJ), The Justice Department (DOJ) is launching a new investigation into whether big tech companies are “unlawfully stifling competition.” It will take aim at Google, Apple, Facebook and Amazon. Notably absent is Microsoft, once the primary focus of the government’s antitrust ire.
Taking investigations to another level. The WSJ says, “The review is designed to go above and beyond recent plans for scrutinizing the tech sector that were crafted by the department and the Federal Trade Commission.” Several months ago the FTC and DOJ each agreed to divide up investigation of the big tech firms, with the FTC taking a look at Facebook and Amazon and the DOJ taking Google/Alphabet and Apple.
The FTC recently fined Facebook $5 billion for alleged violations of a 2011 consent decree that required the company to do a better job of protecting user privacy. This new DOJ investigation is apparently more sweeping and will review “how the most dominant tech firms have grown in size and might—and expanded their reach into additional businesses.” It will also explore how they benefit from “network effects” and their impact on competition.
There’s also yet another, though unconfirmed, antitrust investigation brewing against Alphabet according to the WSJ. And while today’s report suggests that the FTC and DOJ will coordinate their parallel investigations, the DOJ appears to now be taking the lead with a new more aggressive posture.
One door closes, another opens. In 2013, the FTC closed a multi-year investigation into alleged “search bias” at Google, as well as related issues. The settlement reached by Google and the agency required a number of minor changes to Google’s business practices, but nothing structural. Since that time Google critics have lamented that the agency merely delivered a slap on the wrist. But that was a very different time and political climate.
Today both the right and the left are angry at Google and Facebook for different reasons and so the stars have aligned to support these investigations, which are partly motivated by concern about competition and partly political vendetta. Separately, the House Judiciary Committee has also been examining issues of competition and market power in the technology sector, around questions of:
Whether and where competition is lacking in digital marketsWhether large companies are suppressing competitionWhether Congress and regulators need to do more “to address Big Tech’s dominance”
Why we should care. The European Commission has been very aggressive in the past several years investigating and fining Google, and Facebook to a lesser degree. These broad, new investigations in the U.S. could result in fines, which have thus far not been very impactful, but also could bring recommendations for more fundamental change or even the breakup of these companies (though unlikely). Some analysts have cheered the prospect of breaking up Google and Facebook as a means to “unlock additional shareholder value.”
Any such demands from the government would also have to win in court, which is far from certain. In the interim it would likely be business as usual for marketers.
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