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.
On the other side of the Capitol, the House Judiciary Committee
is seeking information from competitors to the large technology
firms as it probes whether they have abused their market power,
according to people familiar with the matter.
Letters sent to the competitors follow detailed document
requests sent Friday to Amazon, Apple, Facebook and Google.
Representatives of lawmakers on the House committee either
declined to comment or didn't immediately respond to requests for
comment. The companies didn't immediately respond to requests for
comment. In response to the House probe, the four companies have
said they are willing to work with authorities and touted the
benefits their products provide to consumers.
The additional letters went to dozens of companies, some of the
people said. What information the letters seek has yet to be made
public. Input from companies that compete with the technology
giants could be helpful to lawmakers in understanding the effect of
the tech giants' business practices.
Among other things, lawmakers Friday sought access to reams of
communications from the tech giants' top executives.
At Tuesday's Senate hearing, 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.
--Ryan Tracy and John D. McKinnon contributed to this
article.
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
September 17, 2019 18:16 ET (22:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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