By John D. McKinnon
WASHINGTON -- State attorneys general are formally launching
separate antitrust probes into Facebook Inc. and Alphabet Inc.'s
Google unit starting next week, putting added pressure on tech
giants already under federal scrutiny.
New York Attorney General Letitia James said Friday that her
office was organizing a bipartisan, multi-state probe into social
media company Facebook. Her announcement confirmed an earlier Wall
Street Journal report.
"I am proud to be leading a bipartisan coalition of attorneys
general in investigating whether Facebook has stifled competition
and put users at risk," Ms. James said in a statement. "We will use
every investigative tool at our disposal to determine whether
Facebook's actions may have endangered consumer data, reduced the
quality of consumers' choices, or increased the price of
advertising."
Joining in the Facebook investigation so far are the attorneys
general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio,
Tennessee, and the District of Columbia, she said. The wide-ranging
investigation focuses on Facebook's "dominance in the industry and
the potential anticompetitive conduct stemming from that
dominance," her office said.
Separately, the Google probe is expected to be announced at a
news conference outside the U.S. Supreme Court on Monday, with a
bipartisan group of about three dozen state attorneys general
joining the effort, according to people familiar with the
matter.
The investigation will be led by Texas Attorney General Ken
Paxton, a Republican, the people said. The attorneys general will
examine the impact of Google on digital advertising markets, this
person said, as well as potential harms to consumers from their
information and ad choices being concentrated in one company.
Facebook recently agreed to shell out $5 billion to settle
Federal Trade Commission allegations that it repeatedly used
deceptive disclosures and account settings to lure users into
sharing personal information, and remains under federal scrutiny
for issues including whether it acquired companies such as
Instagram to stave off competition.
Facebook declined to comment.
Google, which is facing a Justice Department antitrust probe,
said it is cooperating with the inquiries.
"Google's services help people every day, create more choice for
consumers, and support thousands of jobs and small businesses
across the country," said Google spokesman Jose CastaƱeda. "We
continue to work constructively with regulators, including
attorneys general, in answering questions about our business and
the dynamic technology sector."
The action by the attorneys general, which has been anticipated
for weeks, could possibly be expanded to other companies beyond
Google and Facebook, some of the people said.
Public opinion polls suggest Americans are increasingly growing
disenchanted with tech companies, in particular social media
platforms, even as they remain hooked on their services.
One of the main concerns among regulators, lawmakers and state
attorneys general is the dominant role a handful of big tech
companies have in commerce and communications.
"The extreme concentration in the technology industry is bad for
the consumer, and in our opinion it's bad for America," Tennessee
Attorney General Herbert Slatery III said at a June hearing on
antitrust concerns in the tech industry, flanked by two other state
attorneys general. "The concentration has stifled innovation with
market distortions [in] research and development, as entrepreneurs
avoid competing with Google and Facebook and other tech giants. So
we need to do something about that."
For now, it appears unlikely the state and federal
investigations will be formally coordinated. But the federal
enforcers have been meeting with state attorneys general, and
closer cooperation could develop as the probes move forward.
"The FTC values our cooperative relationship with the AGs and
routinely coordinates on tech and antitrust issues," a spokeswoman
for the FTC said.
The Justice Department declined to comment.
The participation of so many attorneys general of both parties
in the probe is potentially worrisome for the big tech companies.
About 20 attorneys general were involved in the federal
government's last major tech antitrust case, against Microsoft
Corp., two decades ago.
Microsoft eventually agreed to an array of conditions in that
case, including making the Windows platform more accessible to
third-party software developers.
At a minimum, the attorneys general's involvement this time is
sure to add complexity and cost for the companies. For instance,
the state attorneys are often able to extract large fines in
antitrust cases, in circumstances where federal enforcers
can't.
The involvement of the attorneys general also lends a bipartisan
gravitas to the antitrust probes, making it harder for the
companies to attack them as politically motivated.
At the same time, the state attorneys will face the challenge of
coordinating complex investigations among so many offices. Some
attorney general offices, particularly in smaller states, also lack
the personnel and resources to throw into the demanding job.
Write to John D. McKinnon at john.mckinnon@wsj.com
(END) Dow Jones Newswires
September 06, 2019 10:35 ET (14:35 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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