Congress, Regulators, and Justice Department Gear Up to Investigate “Big Tech,” But Focus and Scope Under Current Law Remains Unclear
U.S. lawmakers, regulators, and agencies charged with antitrust oversight have long been criticized for failing to act on alleged anticompetitive activity by the world’s largest technology companies—the so-called “Big Four” of Google, Facebook, Amazon, and Apple. This year, however, government interest in oversight has spiked: In February the Federal Trade Commission launched a task force to monitor competition in technology markets and review past mergers, and the FTC and U.S. Department of Justice have reportedly reached an agreement to split jurisdiction over the Big Four, with the FTC taking responsibility for any investigations of Facebook and Amazon and the DOJ taking Google and Apple. On the legislative front, the House Judiciary Committee Subcommittee on Antitrust, Commercial and Administrative Law has announced a series of hearings on competition in digital markets, promising a “top-to-bottom review of the market power held by tech giant platforms.” And last Tuesday, DOJ Antitrust Division head Makan Delrahim told the Antitrust New Frontiers Conference in Tel Aviv, Israel that the DOJ was equipped under existing law to combat anticompetitive activity in the digital economy, stressing the particular harms of collusion, exclusivity and tying arrangements, and acquisition of nascent competitors.
The uptick in scrutiny follows increasingly aggressive investigation and enforcement actions from European antitrust agencies. In 2017, the European Commission fined Google billions of dollars for favoring its own vertically-integrated comparison-shopping service in search results. Last July, after a three-year investigation (which we previously covered), the European Commission levied additional billions in fines for tying Google search services to the Google-developed Android operating system; paying phone manufacturers and networks for exclusive pre-installation of Google search; and barring manufacturers from using versions of Android not approved by Google. And in March, the Commission fined Google billions more after concluding its use of exclusivity or “Premium Placement” clauses in advertising service contracts illegally impaired competitors’ ability to compete.
Google is not the only target of European regulators. In February, the German Federal Cartel Office ordered Facebook to stop requiring users to agree that Facebook may aggregate their data collected from Facebook, Facebook-owned platforms like Instagram, and third-party websites; the Office concluded that these mandatory terms illegally leveraged market power to further strengthen Facebook’s dominance. Germany is also investigating Amazon’s potential abuse of market dominance to impose unfavorable terms on sellers, and both the European Commission and Italy are probing whether Amazon is exploiting its role as host for third-party vendors to its own advantage. And Spotify has filed a complaint with the European Commission alleging that Apple’s App Store unfairly advantages developers who use Apple’s proprietary payment system.
Until recently, oversight of the Big Four in the United States has not focused on alleged antitrust concerns. Rather, enforcement efforts have focused on data security and alleged privacy violations—for example, the FTC has been investigating Facebook for violations of a 2011 privacy consent decree after user data was accessed without authorization by Cambridge Analytica, and Facebook is reportedly readying to pay a fine of between $3 and $5 billion. The express focus of these newly invigorated oversight and investigative efforts is concentration and competition, but it remains unclear to what extent existing antitrust laws will be implicated and what types of conduct, if any, may be targeted for investigation.
As to Congress, the House Antitrust Subcommittee has thus far only held a hearing on the consequences of concentration for “press freedom”—not in itself a traditional focus of the antitrust laws—at which publishers testified that large online platforms’ market power permitted them to dictate lower prices for content, and their advertising services enabled platforms to profit off publishers’ content while driving traffic to news aggregators. Legislation introduced earlier this year and promoted at the hearing would exempt news content creators from antitrust laws, permitting content creators to cooperatively negotiate content prices with the largest digital platforms.
The FTC and DOJ’s specific focus, while non-public, is broadly evident from public announcements and news reports. The FTC is reportedly making direct outreach to smaller technology companies for reports of anticompetitive conduct and evidence of anticompetitive mergers. And the past enforcement actions Assistant Attorney General Delrahim invoked in his Tuesday remarks may suggest some of his agency’s particular priorities: He cited United States v. Dentsply, which held unlawful a dominant manufacturer’s exclusive dealing arrangement with 30 independent dealers because it limited competitors to low market share, and the 1998 prosecution of Microsoft for, among other things, illegally tying its web browser to its operating system. It may be no coincidence that Google was faulted by the European Commission for allegedly “tying” Google search to Android and imposing exclusivity terms in contracts involving both Google search services and the Android OS. In fact, the DOJ is reportedly already preparing its investigation of Google’s “business practices related to its search and other businesses.”
The DOJ may also be guided by the FTC’s earlier, 2011–2012 investigation of Google, during which FTC staff preliminarily concluded that, among other things, Google (1) favored its own sites over those of competitors, although it was unlikely a violation of Section 2 of the Sherman Act given potential procompetitive justifications; (2) unlawfully disadvantaged competitors in the search and search advertising space by imposing contractual restrictions preventing advertisers from using rival advertising platforms; and (3) entered into unlawful, monopoly-enhancing exclusive agreements with websites for search and search advertising services. That investigation, however, ultimately resulted in no enforcement action. As noted above, the European Commission made a different decision in 2017, fining Google billions for favoring its sites at the expense of competitors’.
We’ll continue to monitor these House hearings, legislative proposals, and DOJ and FTC investigations and provide updates as they unfold.