By John D. McKinnon
WASHINGTON -- Big Tech's legal woes are expected to worsen in
the coming weeks as federal and state antitrust authorities prepare
to file new lawsuits against Facebook Inc. and Alphabet Inc.'s
Google, people familiar with the matter said.
The authorities are readying as many as four more cases
targeting Google or Facebook by the end of January, these people
said, following the Justice Department's antitrust lawsuit against
Google last month.
Federal and state officials are probing whether the tech giants
abused their power in the internet economy -- Google to dominate
search and advertising, and Facebook to dominate social media.
Google and Facebook have denied doing so, saying they operate in
highly competitive markets and that their services, which are
mostly free, benefit consumers.
If Facebook were to be sued, it would mark the first government
antitrust action against the social-media titan in the U.S.
Facebook has come under particular criticism from Republicans and
Democrats in Congress as well as President-elect Joe Biden over its
content-moderation policies.
Democrats generally contend the company has been too lax in
policing misleading speech, while Republicans say Facebook has
sometimes suppressed conservatives. Facebook has said it aims to
support free speech while limiting hate speech and other harmful
content.
Apple Inc. and Amazon Inc., which along with Google and Facebook
came under fire from a congressional panel in July, are also under
scrutiny from antitrust officials.
The Federal Trade Commission has been investigating whether
Amazon unfairly uses its size and platform against competitors and
other sellers on its site. The Justice Department also has been
examining Apple's use of its App Store for possible anticompetitive
practices.
Amazon also faces fresh legal battles with the European Union
after the bloc charged the online retailer with violating
competition law in a new salvo in its scrutiny of U.S. tech
corporations.
The European Commission -- the bloc's top antitrust enforcer --
charged Amazon with using nonpublic data it gathers from
third-party sellers to unfairly compete against them.
Amazon declined to comment.
The commission has also opened two antitrust probes to determine
whether Apple violated competition laws with its App Store and
Apple Pay service.
Apple has said it is "disappointing the European Commission is
advancing baseless complaints from a handful of companies who
simply want a free ride, and don't want to play by the same rules
as everyone else."
Former FTC chairman William Kovacic said the likelihood of
additional suits in the U.S. against big tech companies reflects
growing bipartisan concerns among elected leaders about their size
and impacts. That is giving antitrust authorities confidence that
they can withstand any political pressure from the companies.
"The supportive chorus of elected officials is giving assurance
to DOJ and the FTC that they have the political support they need
to blunt [the companies'] efforts...to pressure the agencies to
back off or water down their cases," said Mr. Kovacic, who is now a
law professor at George Washington University.
He noted that some California lawmakers pressured the FTC to
rein in its antitrust investigation of Google from 2010-2013. The
FTC closed its Google probe without bringing a case, saying the
company both improved products for consumers and hobbled
rivals.
Microsoft also coaxed friendly lawmakers to try to get DOJ off
its back two decades ago, Mr. Kovacic said.
The FTC is nearing approval of an antitrust suit against
Facebook in coming days, according to people familiar with the
matter. The commission has been focused on whether Facebook stifled
competition through acquisitions such as Instagram and
WhatsApp.
One holdup has been the question of whether to file the case in
federal district court or in the FTC's own administrative court,
these people said.
Filing in the administrative court would give the FTC certain
procedural advantages. But for now, the FTC appears likely to file
in district court, where its suit could be combined with a possible
suit by state attorneys general, people familiar with the matter
said.
The coalition of state attorneys general, led by New York
Attorney General Letitia James, could file its own case against
Facebook in federal district court in early December, these people
said, although the exact timing could depend on whether the suit
would be filed jointly with the FTC.
In a statement, Ms. James declined to comment on a continuing
investigation but went on to say that her office "will continue to
use every investigative tool at our disposal to determine whether
Facebook's actions stifled competition, reduced choices, or put
user data at risk."
Facebook declined to comment.
Another coalition of state attorneys general, led by Ken Paxton
of Texas, is aiming to file an antitrust case against Google over
its powerful online-advertising business.
While DOJ's case against Google focuses on its search services,
the Texas-led probe centers on its sprawling ad-tech business.
Much of Google's power as an ad broker stems from acquisitions
of ad-tech companies, especially its 2008 purchase of DoubleClick
Inc. Regulators who approved that $3.1 billion deal warned they
would step in if the company tied together its offerings in
anticompetitive ways. Some publishers and advertisers say that is
what has happened.
One person familiar with the matter said the suit case could be
filed as soon as mid-December.
One complication: Mr. Paxton has been accused of unrelated
ethics violations by former employees in his office, which the
person familiar with the matter said has slowed but not derailed
the probe.
Mr. Paxton has said he did nothing wrong.
Still another coalition of attorneys general -- this one led by
Colorado -- is preparing to file an antitrust case against Google
over its search business in coming weeks, according to the person
familiar with the matter.
That case would broadly resemble the case already brought by the
Justice Department but is expected to be farther-reaching by
addressing concerns of specialized search-engine platforms such as
Yelp Inc. that complain of being unfairly marginalized by
Google.
If state officials proceed with the suit, it is likely to be
combined with the DOJ case at some point, since federal courts
often consolidate cases dealing with similar issues to conserve
judicial resources.
"This is a historic time for both federal and state antitrust
authorities, as we work to protect competition and innovation in
our technology markets," a group of attorneys general including
Colorado's Phil Weiser said in a recent statement. "We plan to
conclude parts of our investigation of Google in the coming weeks.
If we decide to file a complaint, we would file a motion to
consolidate our case with the DOJ's."
Google has called the DOJ case flawed, and has said that people
"use Google because they choose to, not because they're forced to,
or because they can't find alternatives."
In addition to the state efforts, the Justice Department hasn't
ruled out expanding its own antitrust case against Google over its
online advertising business.
Yet another source of potential worry for the big tech companies
would be private lawsuits seeking damages for the same types of
alleged wrongdoing, Mr. Kovacic said. A few such cases already are
under way.
More than 10 antitrust lawsuits, many of them seeking
class-action status, have been filed against Google in recent
months, according to a federal district court filing on behalf of
one plaintiff in Washington, D.C.
They include actions brought on behalf of app purchasers and
developers, alleging that Google restricts competition in the
Android mobile app market, allowing it to unfairly charge higher
prices. Some online advertisers also have filed suit.
Google declined to comment on those suits. Google has said in
the past that Android users are able to download the app store they
prefer. Google has also previously pointed to a crowded and
competitive online advertising industry where prices have
fallen.
Write to John D. McKinnon at john.mckinnon@wsj.com
(END) Dow Jones Newswires
November 30, 2020 10:23 ET (15:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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