By John D. McKinnon and James V. Grimaldi
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 6, 2019).
WASHINGTON -- The Justice Department and the Federal Trade
Commission are clashing over their oversight of the Trump
administration's antitrust agenda in the technology industry.
The Justice Department's antitrust division has flexed its
muscles in ways that have rankled staff at the FTC, most
particularly in an antitrust lawsuit against Qualcomm Inc. After
the FTC prevailed in a 10-day trial in federal court in San
Francisco in May, FTC lawyers were taken aback when Justice
Department lawyers sided with Qualcomm in the appeal phase of the
The two agencies, which have divvied up antitrust enforcement
for more than a century, have been known to skirmish over their
shared responsibilities in the past. But some observers say it has
reached new heights just as the scrutiny of companies such as
Alphabet Inc.'s Google unit, Amazon.com Inc., Facebook Inc. and
Apple Inc. has become a priority in Washington.
The tensions are raising alarm, from the antitrust legal
community to Congress, that the continuing feud could disrupt the
coming probes into large technology companies, sometimes called Big
Tech, or could place an unfair burden on the companies under
"What's evident from this latest institutional tug of war is
that the Antitrust Division and FTC are now actively battling each
other to take the lead in pursuing Big Tech," Sen. Mike Lee (R.,
Utah), the chairman of the Senate antitrust subcommittee, said last
The jurisdictional skirmishing is raising the possibility that
individual companies could face different and possibly duplicative
investigative approaches and civil subpoenas, depending on which
agency winds up probing a particular company or practice.
The tussling over jurisdiction was on display last month when
the Justice Department said that it was conducting a sweeping
review of "whether and how market-leading online platforms have
achieved market power and are engaging in practices that have
reduced competition, stifled innovation or otherwise harmed
The announcement caught by surprise some senior staff at the FTC
bureau of competition, though the commission chairman himself was
informed ahead of time, according to people familiar with the
matter. Before opening investigations, the agencies usually consult
with one another and negotiate agreements to avoid duplicating
And yet, the announcement muddled aspects of an agreement the
two sides had reached just a few weeks earlier. In that earlier
agreement, described by multiple people familiar with the matter,
the Justice Department was to focus on issues surrounding Google as
well as Apple, while the FTC was to take on certain issues
surrounding Facebook and Amazon.
In its statement last week, however, the Justice Department
signaled its review would explore "the widespread concerns that
consumers, businesses, and entrepreneurs have expressed about
search, social media, and some retail services online."
The reference to social media and retail services was widely
interpreted by the legal community to mean Facebook and Amazon, two
companies that under the earlier agreement stood to have at least
some of their conduct reviewed by the FTC.
"For the outside observer, such internecine warfare can only
undermine confidence in the agencies and lead to public distrust,"
said Andrew Gavil, a Howard University antitrust law professor. "It
will also needlessly complicate any investigations and leave the
wider technology community guessing as to where the line is between
lawful and unlawful business strategies."
The head of the FTC's competition bureau, Bruce Hoffman, said
that the agencies have sorted jurisdictional issues through "a
process that has generally worked very well, and been respected by
both agencies, for decades (with, of course, rare hiccups that
always get straightened out)."
The Justice Department declined to comment.
FTC Chairman Joe Simons said in a brief interview last month
that the FTC, like the Justice Department, is looking into areas
where individual companies enjoy market power. He said he wasn't
worried about the possibility of overlapping with the Justice
Department when it comes to investigations into specific
Mr. Simons added that the Justice Department-FTC agreement --
first reported by The Wall Street Journal in late May -- didn't
foreclose the possibility of the Justice Department looking into
some aspects of a tech giant while the FTC focused on other aspects
of the same business.
For instance, the Justice Department could look into Amazon's
book publishing, where the antitrust division has always had
expertise, while the FTC could focus on Amazon's grocery-store
operations, since the commission has traditionally handled retail
The FTC announced its own high-tech task force early in the year
to conduct a similar wide-ranging review. But that was before the
agreement announced in late May.
Makan Delrahim, assistant attorney general for the Justice
Department's antitrust division, said in an interview in June that
he favors taking a broad view of whether Big Tech dominance is
harming innovation, product quality and consumer choice. His boss,
Attorney General William Barr, also has signaled interest in
potential antitrust issues in the Big Tech area.
Sen. Lee, a critic of the Big Tech investigations, urged better
coordination and said he planned to explore the jurisdiction issue
at a coming Senate hearing. "Their duplicative reviews will
inevitably waste government resources and lead to the agencies
taking contradictory positions on the same issues," Mr. Lee
Mr. Lee's Democratic counterpart on the House antitrust
subcommittee, Rep. David Cicilline (D., R.I.), who is more
sympathetic to the investigations, raised similar concerns in a
letter to Mr. Delrahim in May. Mr. Cicilline was troubled
particularly by the Qualcomm intervention.
"It is especially striking that the Division would think it
appropriate to broadly channel this view through unprecedented
interference in a sister agency's case," Mr. Cicilline wrote. "The
fact that the defendant in the Commission's case is a former client
of yours also raises a serious ethics question about the degree of
involvement in the decision to file this statement."
Mr. Delrahim, who was a registered lobbyist for Qualcomm from
2014 to 2016, didn't sign the two briefs that have caused
consternation at the FTC. He has criticized the FTC's legal theory
in a speech, but didn't mention Qualcomm. He recently signed
another Justice Department brief siding with Qualcomm on a related
private case before the same federal judge.
A Justice Department spokesman said Mr. Delrahim followed the
advice of the department's ethics officials. "He was recused from
all matters involving Qualcomm until Jan. 21, 2019, when his
recusal period was over, " the spokesman said. "Moreover, out of an
abundance of caution he has recused himself from the specific
matter of FTC v. Qualcomm."
One Justice Department filing that particularly stung attorneys
at the FTC, according to people familiar with the matter, was a
brief that openly questioned the merits of the FTC case and stating
that Qualcomm was likely to succeed on appeal.
While not directly related to the broader technology
investigations, the Qualcomm dispute could make it difficult for
the attorneys to cooperate as they embark on parallel
investigations, said Herb Hovenkamp, an antitrust law professor at
the University of Pennsylvania Law School.
"I think the FTC is rightfully feeling injured and somewhat
abused by this," Mr. Hovenkamp said. "That could certainly muddy
the waters and create some hard feelings."
Write to John D. McKinnon at email@example.com
(END) Dow Jones Newswires
August 06, 2019 02:47 ET (06:47 GMT)
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