By Brent Kendall
WASHINGTON -- The Justice Department is opening a broad
antitrust review into whether dominant technology firms are
unlawfully stifling competition, adding a new Washington threat for
companies such as Facebook Inc., Google, Amazon.com Inc. and Apple
Inc.
The review is geared toward examining the practices of online
platforms that dominate internet search, social media and retail
services, the department said, confirming the review shortly after
The Wall Street Journal reported it.
The new antitrust inquiry is the strongest signal yet of
Attorney General William Barr's deep interest in the tech sector,
and it could ratchet up the already considerable regulatory
pressures facing the top U.S. tech firms. The review is designed to
go above and beyond recent plans for scrutinizing the tech sector
that were crafted by the department and the Federal Trade
Commission.
The two agencies, which share antitrust enforcement authority,
in recent months worked out which one of them would take the lead
on exploring different issues involving the big-four tech giants.
Those turf agreements caused a stir in the tech industry and
rattled investors. Now, the new Justice Department review could
amplify the risk, because some of those companies could face
antitrust claims from both the Justice Department and the FTC.
The FTC in February created its own task force to monitor
competition in the tech sector; that team's work is ongoing.
The Justice Department will examine issues including how the
most dominant tech firms have grown in size and might -- and
expanded their reach into additional businesses. The Justice
Department also is interested in how Big Tech has leveraged the
powers that come with having very large networks of users, the
department said.
There is no defined end-goal yet for the Big Tech review other
than to understand whether there are antitrust problems that need
addressing, but a broad range of options are on the table, the
officials said. The department's inquiry could eventually lead to
more focused investigations of specific company conduct, they
said.
The review also presents risks for the companies beyond whether
antitrust issues are identified. The department won't ignore other
company practices that may raise concerns about compliance with
other laws, officials said.
"Without the discipline of meaningful market-based competition,
digital platforms may act in ways that are not responsive to
consumer demands," Justice Department antitrust chief Makan
Delrahim said in a statement. "The department's antitrust review
will explore these important issues."
Representatives for Facebook, Google, Amazon and Apple didn't
immediately respond to requests for comment.
The Justice Department already has been preparing to probe
whether Alphabet Inc.'s Google is engaging in unlawful
monopolization practices. The Wall Street Journal on May 31
reported the department's plans for that investigation, whose
existence hasn't been confirmed by Justice Department.
The department's antitrust division will conduct both reviews;
it is unknown if and when the two efforts will intersect. On the
broader tech review, the division will work in close coordination
with Deputy Attorney General Jeffrey Rosen, the officials said.
The department appears to be hitting the ground running. It
recently hosted a private presentation where officials heard from
critics of Facebook, including academics, who walked through their
concerns about the social-media giant and advocated for its
breakup, according to people familiar with that meeting. Tech and
antitrust observers believed issues related to Facebook's dominance
were to be handled by the FTC.
Both the FTC and the Justice Department have made clear that
they view tech-sector competition issues as a priority.
Under agreements brokered in recent months between Mr. Delrahim
and FTC Chairman Joseph Simons, the Justice Department obtained
clearance to proceed with a probe of whether Google has engaged in
illegal monopolization tactics, as well as jurisdiction over Apple
for similar issues. The FTC, meanwhile, won for itself the right to
explore monopolization questions involving Facebook and Amazon.
(The commission already has undertaken a lengthy
consumer-protection investigation of Facebook's privacy practices,
and the company has agreed to a $5 billion fine.)
Justice Department officials said those agreements weren't meant
to be open-ended or all-encompassing. But in any case the
department isn't trying to pre-empt the FTC's work, they said, and
suggested the two agencies might explore different tech practices
by the same company, as well as different legal theories for
possible cases.
The two agencies have been in regular contact at both the
leadership and staff levels to coordinate their efforts, according
to a person familiar with the discussions.
The Big Tech companies have said they are highly innovative
firms that create jobs and provide products and services that
consumers love. They have said they have rightly won their places
at the top of the tech pyramid and have to compete fiercely to stay
there.
But while the top tech firms were once the darlings of the
public, attitudes have shifted as some consumers, and politicians
on both the left and the right, have grown uncomfortable with how
much power and influence they wield in the economy and society.
Some Democratic presidential candidates have called for the breakup
of companies like Google and Facebook, while lawmakers of both
parties have sounded alarm bells, though at times for different
reasons. Some Republicans have voiced concerns about whether tech
companies disfavor conservative voices, claims that industry
leaders have denied.
President Trump has escalated his criticisms of Big Tech
recently, openly suggesting the U.S. ought to sue Google and
Facebook, comments that could hang over the Justice Department's
new efforts.
Aside from Justice Department and FTC scrutiny, a House
antitrust subcommittee also is taking a broad look at potential
anticompetitive conduct in the tech sector. Executives from
Facebook, Google, Apple and Amazon all testified before the panel
last week.
Seeds for the new Justice Department review were planted in
January at Mr. Barr's confirmation hearing, when he said that he
believed antitrust issues in the tech sector were important.
"I don't think big is necessarily bad, but I think a lot of
people wonder how such huge behemoths that now exist in Silicon
Valley have taken shape under the nose of the antitrust enforcers,"
Mr. Barr told senators. "You can win that place in the marketplace
without violating the antitrust laws, but I want to find out more
about that dynamic."
Justice Department officials said they would use the new
antitrust review to seek extensive input and information from
industry participants, and eventually from the dominant tech firms
themselves. It isn't yet known whether much of the
information-gathering will be done on a voluntary basis or if
companies eventually could be compelled by the government to turn
over materials.
--Ryan Tracy contributed to this article.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
July 23, 2019 17:49 ET (21:49 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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