By Brent Kendall, Kristina Peterson and Keach Hagey
The Justice Department's top antitrust official said he would
act to protect competition in the digital marketplace, his first
public remarks on the issue since news reports that the department
was preparing to investigate Alphabet Inc.'s Google.
U.S. Assistant Attorney General Makan Delrahim, in a speech
delivered Tuesday via video to a Tel Aviv University antitrust
conference, didn't specifically mention plans for an investigation
of big tech firms, but he said a close examination of the digital
economy was important in markets where one or two companies were
dominant.
"The current landscape suggests there are only one or two
significant players in important digital spaces, including internet
search, social networks, mobile and desktop operating systems, and
electronic book sales," he said. "This is true in certain input
markets as well. For example, just two firms take in the lion's
share of online ad spending."
Some markets, he said, have few firms "for reasons having
nothing to do with a failure of competition. Even so, digital
markets are not impervious to anticompetitive transactions, illegal
restraints and unlawfully obtained or exercised monopoly
power."
Mr. Delrahim's remarks were his most aggressive to date in
suggesting large tech firms were ripe for scrutiny, citing
comparisons with monopolists from earlier eras, as well as quoting
from a recent book critical of Big Tech.
The speech came amid other antitrust developments, including a
call Tuesday by Sen. Elizabeth Warren (D., Mass.) -- who is running
for president -- for Mr. Delrahim to recuse himself from any
matters involving Google and Apple Inc. because he had previously
done work for the companies while in private practice. The request
prompted private discussions among both Google supporters and
critics about whether work Mr. Delrahim did for the search giant 12
years ago was relevant for any investigation now -- and whether
either side would benefit if he didn't participate in a Justice
Department probe.
Elsewhere on Capitol Hill, a House antitrust subcommittee opened
the first of planned hearings examining competition in the digital
marketplace.
Senior Democrats said they would be willing to revisit antitrust
laws to help address the challenges raised by the dominance of
giant technology companies, including the decline of local
journalism.
"Congress -- not the courts, agencies or private companies --
enacted the antitrust laws. And Congress must be responsible for
determining whether they are equipped for the competition problems
of our modern economy," said Rep. David Cicilline (D., R.,I.), the
subcommittee chairman.
Witnesses, including David Pitofsky the general counsel of News
Corp., the parent company of The Wall Street Journal, raised
concerns over the ability of Facebook Inc. and Google to act as a
fair gatekeeper between news outlets, readers and online
advertisers.
Mr. Cicilline said the next hearing would focus on "the dominant
platforms' impact on innovation and entrepreneurship."
Mr. Delrahim's speech, which aired at a conference whose
attendees included a prominent Google economist, stressed that
dominant companies can raise competition concerns in ways other
than higher prices. The issue has particular relevance in the
digital economy, where some companies give away their services
free.
"Price effects alone do not provide a complete picture of market
dynamics, especially in digital markets in which the
profit-maximizing price is zero," he said.
Antitrust enforcers are concerned about harms to innovation,
product quality and privacy, the DOJ antitrust chief said. He
compared today's tech giants to the Standard Oil monopoly of the
late 19th and early 20th century.
"Like today's tech giants, Standard Oil was pioneering and
generated a number of important patents. Scholars have noted,
however, that Standard Oil's innovation slowed as it became an
entrenched monopolist," Mr. Delrahim said.
The Journal reported May 31 that the Justice Department's
antitrust division was laying the groundwork for an antitrust
investigation of Google, after reaching a jurisdictional agreement
with the Federal Trade Commission. The department hasn't commented
on whether it was planning such a probe.
Sen. Warren on Tuesday sent letters to Mr. Delrahim and a
department ethics representative seeking the top antitrust
official's recusal. She cited Mr. Delrahim's work for Google in
2007 as it sought approval from the Federal Trade Commission to buy
internet ad firm DoubleClick, saying he "should not be supervising
investigations into former clients who paid him tens of thousands
of dollars to lobby the federal government."
Google in the years since the DoubleClick deal has grown into a
force in the digital advertising market.
Legal experts said the matter likely would need to be examined
by Justice ethics officials.
"The issue here is, did he get information while representing
Google that can now be used against Google's interests," said
Stephen Gillers, a professor of legal ethics at New York
University. He said Mr. Delrahim may need both Google and the
Justice Department's permission to participate.
Both Google supporters and critics were still forming their
legal and strategic views on the issue, according to people
familiar with the matter. Some of those people said it wasn't clear
that Google had any role to play in deciding Mr. Delrahim's
status.
--Dov Lieber contributed to this article
Write to Brent Kendall at brent.kendall@wsj.com, Kristina
Peterson at kristina.peterson@wsj.com and Keach Hagey at
keach.hagey@wsj.com
(END) Dow Jones Newswires
June 11, 2019 19:27 ET (23:27 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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