GOOG Alphabet Inc

By Brent Kendall 

WASHINGTON -- Senators on Tuesday criticized how the Justice Department and Federal Trade Commission are orchestrating major antitrust reviews of the biggest tech companies and questioned whether the agencies were capable of taking on firms such as Facebook Inc. and Alphabet Inc.'s Google.

In a wide-ranging oversight hearing, Democrat senators also repeatedly questioned the Justice Department's motivations for opening up an investigation of four auto makers that recently struck a deal with California on vehicle-emissions standards. The exchanges with Justice Department antitrust chief Makan Delrahim produced an uncommonly open exchange about the pending probe.

Mr. Delrahim said auto makers "cannot cooperate among themselves," even for socially laudable goals. But he said he didn't yet know enough about the agreement to determine whether there is an antitrust problem.

Democrats said the auto probe looked bad given the Trump administration's opposition to California's approach on tailpipe emissions. "To the average American, it appears to be totally political, " Sen. Patrick Leahy (D., Vt.) said, an allegation Mr. Delrahim denied.

On Big Tech, lawmakers cited evidence that the two agencies aren't getting along and questioned whether turf wars are interfering with the government's ability to tackle pressing issues about how Facebook, Google, Amazon.com Inc. and other tech firms are operating in the marketplace.

"I have been critical of the fact that we have two federal agencies responsible for civil antitrust enforcement," Sen. Mike Lee (R., Utah) told Mr. Delrahim and FTC Chairman Joe Simons at the hearing. "And, I have to say, your two agencies have done a remarkable job in recent months of making my points."

The Justice Department and FTC share U.S. antitrust authority and sometimes have to negotiate which agency will handle an investigation. Both are interested in exploring whether the nation's most powerful tech companies are unlawfully suppressing competition.

The two privately have been at loggerheads over investigating Facebook, The Wall Street Journal reported Monday. The FTC is probing the social-media giant on a handful of issues, including the company's past acquisitions of up-and-coming tech firms. The Justice Department wants to scrutinize other company practices, and each agency thinks the other is breaking a jurisdictional arrangement they reached in July.

Mr. Lee, who heads the Senate antitrust subcommittee that convened Tuesday's hearing, said splitting a monopolization probe between two sets of antitrust enforcers makes no sense. "Doing so simply looks like both agencies want to have the same piece of the same pie at the same time," he said.

Messrs. Simons and Delrahim both acknowledged to the panel that there have been instances in which their negotiating process has broken down.

Sens. Josh Hawley (R., Mo.) and Richard Blumenthal (D., Conn.), meanwhile, both questioned whether the two agencies were stuck in a "culture of capitulation" that made them gun-shy about taking on Big Tech. Each criticized the FTC's recent $5 billion settlement with Facebook for privacy violations as inadequate.

Mr. Simons was quick to defend the commission's work, pushing back on suggestions that the commission was soft. Had the FTC gone to court against Facebook, the litigation would have taken years to complete "and a court would have given us far less," he said.

Sen. Amy Klobuchar of Minnesota, the top Democrat on the panel, said she was less focused on agency turf battles than on the bigger picture, "which is how we're going to take on the monopoly issues of our time." She expressed concern that European enforcers have long been more active on tech competition issues than the U.S.

Messrs. Simons and Delrahim, under public pressure to take on Big Tech firms, earlier this year negotiated arrangements that cleared the Justice Department to investigate Alphabet's Google for possible monopolistic tactics and also gave the department jurisdiction over Apple Inc. for similar issues. The FTC secured for itself the right to explore monopolization questions involving Facebook and Amazon.com Inc.

Interagency talks over Facebook later became more complicated. The Justice Department in late July announced it would undertake a broad review of online platforms including the social media giant, raising the prospect that both agencies could end up bringing a case against the same company.

After a sustained barrage of senators' questions on tech issues, much of the hearing's focus shifted to the Justice Department's decision last month to investigate an agreement reached in July between the California Air Resources Board and Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG.

Under the deal, the companies pledged to reduce their greenhouse-gas emissions by 3.7% annually from model years 2022 to 2026, getting some credit toward that goal by selling electric vehicles. The targets are tamer than those adopted under President Obama but more stringent than those proposed by the Trump administration, which is seeking to roll back the Obama-era rules intended to cut the auto industry's contribution to climate change.

Several Democrats said the California agreement didn't appear to raise any antitrust concerns. "Why would you be focusing resources on this?" Ms. Klobuchar asked Mr. Delrahim.

The Justice Department's top antitrust official said his office had learned through press reports that the companies may have worked together to craft the emissions deal they wanted with California. If the auto makers hashed out the agreement among themselves without the state in the middle of it, that could be a problem, Mr. Delrahim said. He said the department doesn't have evidence of improper collusion but it seeking more information from the companies.

"I'm not doing this for political reasons," Mr. Delrahim said. The fact that the department is seeking information from the auto makers "doesn't mean I'm bringing a lawsuit tomorrow," he said.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

September 17, 2019 17:38 ET (21:38 GMT)

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