By John D. McKinnon and Brent Kendall 

WASHINGTON -- Bad blood between the U.S. government entities investigating the giants of the tech industry has grown more intense with the delivery of a letter from one agency to the other that might be considered the equivalent of a brushback pitch.

Both agencies -- the Federal Trade Commission and the Justice Department's antitrust division -- assert authority to investigate whether U.S. companies are violating antitrust law by squeezing out competition. In recent months, the two entities, as well as a number of state attorneys general, have launched high-profile scrutiny of tech giants such as Alphabet Inc.'s Google and Facebook Inc. that have come to dominate nearly every aspect of Americans' digital lives.

Now, in the letter sent late last week to the Justice Department, the FTC complained about the department's behavior and raised concerns about recent interactions between the two agencies, according to people familiar with the matter. A turf battle over government scrutiny of Facebook is a key point of contention, the people said.

The previously undisclosed letter, signed by FTC Chairman Joe Simons, raises the prospect that a longstanding power-sharing agreement between the agencies is fraying. It is also raising broader concerns that the boiling tension could eventually derail the agencies' focus on Big Tech -- among the biggest and most significant undertakings that either of them has conducted in years.

The FTC and the Justice Department declined to comment.

The chairman of the Senate subcommittee on antitrust matters, Republican Mike Lee of Utah, said he plans to ask about the letter and the tensions it reflects at a hearing Tuesday. Both Mr. Simons and DOJ antitrust chief Makan Delrahim are expected to testify.

"Sen. Lee is aware of the letter and he intends to inquire at tomorrow's oversight hearing about whether the clearance process between the agencies is working and, if not, whether the FTC and DOJ are engaging in duplicative investigations," a Lee spokesman said on Monday. That clearance process, a longstanding arrangement between the two agencies, helps determine which of them investigates particular areas.

Mr. Lee has raised concerns about clashes between the agencies on several recent occasions -- for example, when the Justice Department took the unusual step of undercutting the FTC's antitrust lawsuit against chip maker Qualcomm Inc. this year. He has even suggested that having two federal enforcement agencies could be contributing to the problems.

"This kind of dysfunction and confusion illustrates why having two agencies at loggerheads does not make for effective antitrust enforcement," Mr. Lee said in August.

The FTC and the Justice Department share antitrust-enforcement authority in the U.S. While they have at times been rivals and engaged in turf battles, employees in both agencies acknowledge that their interactions lately have become abnormally strained.

Tech issues are a major contributing factor. Both the FTC and DOJ are under considerable pressure to investigate and potentially challenge a range of actions by a handful of companies -- Apple Inc. and Amazon.com Inc. are two others -- that dominate online search, retail and social media.

One central flashpoint now is whether the Justice Department will conduct its own antitrust investigation of Facebook, according to people familiar with the matter.

Messrs. Delrahim and Simons earlier this year negotiated arrangements that cleared the Justice Department to investigate Google for possible monopolistic tactics and also gave the department jurisdiction over Apple for similar issues. The FTC secured for itself the right to explore monopolization questions involving Facebook and Amazon.

But Mr. Simons then met with DOJ officials, including Attorney General William Barr, in early July to talk more specifically about Facebook, people familiar with the matter said. The two agencies agreed that the Justice Department wouldn't pursue Facebook on a couple of issues the FTC already was focusing on, but could investigate the social media giant in other areas that might raise antitrust concerns, the people said.

In recent weeks, however, the Justice Department and the FTC have disagreed on the interpretation of the agreement and whether each side is honoring it, the people said.

The Justice Department in late July announced a broad review of whether dominant online platforms in general are unlawfully stifling competition. That raised the rare possibility that both agencies might probe Facebook at the same time.

The FTC's Facebook probe is investigating, among other things, whether the social-media giant pursued acquisitions designed to eliminate potential future competitors. The Justice Department, meanwhile, also has been fielding complaints about Facebook, including from people who advocate breaking up the company.

Facebook didn't provide a comment in response. Over the summer, the company said the FTC was investigating "in the areas of social networking or social media services, digital advertising, and/or mobile or online applications."

Google and Amazon declined to comment. Apple didn't immediately respond to requests for comment.

Still another sore point going on for months is the Justice Department's decision this year to step into the FTC's antitrust lawsuit against Qualcomm. The commission won a favorable ruling from a California federal judge in May that forced major changes to Qualcomm's business practices, but an appeals court last month stayed the effect of that ruling for now.

The Justice Department is supporting Qualcomm, saying the trial judge's ruling was incorrect in several respects. It also argued in court papers that the ruling would diminish Qualcomm's competitiveness in 5G innovation and impact national security. The appeals court cited the Justice Department's position when it granted Qualcomm a stay last month.

FTC officials believe the department fundamentally misunderstands their case and that the DOJ didn't properly consult them before intervening, according to people familiar with the matter.

Qualcomm has said its business practices were justified and lawful.

The battles between the two agencies are "a real drag on the effectiveness of the U.S. [antitrust] system," said William Kovacic, a former FTC commissioner who is now a George Washington University law professor. "It doesn't destine the individual efforts to failure by any means, but it diminishes the prospects of success. It makes it harder to achieve a good result."

Write to John D. McKinnon at john.mckinnon@wsj.com and Brent Kendall at brent.kendall@wsj.com

 

(END) Dow Jones Newswires

September 16, 2019 22:26 ET (02:26 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Meta Platforms Charts.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Meta Platforms Charts.