U.S. Attorney General William Barr said on Tuesday that he hoped to have Justice Department investigations of the big tech platforms – Facebook Inc, Alphabet Inc’s Google, Amazon.com Inc and Apple Inc – completed next year.
The four tech companies have been lightning rods for regulator probes this year.
It was announced in July that the Department of Justice had opened a sweeping antitrust investigation of big technology companies to look at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers.
The move came as a growing number of lawmakers called for stricter regulation or even breaking up of the big tech companies, which have come under intense scrutiny following a series of scandals that compromised users’ privacy.
In addition to the Justice investigations, the Federal Trade Commission, state attorneys general and Congress are looking at one or more of the companies.
‘We started in earnest in July. It’s been moving very quickly,’ Barr told the Wall Street Journal CEO Council.
U.S. Attorney General William Barr, pictured, said on Tuesday that he hoped to have Justice Department investigations of the big tech platforms – Facebook Inc, Alphabet Inc’s Google, Amazon.com Inc and Apple Inc – completed next year
He added: ‘We’re talking very broadly with people and getting a lot of input from people in the industry and experts and so forth.’
‘I’d like to have it completed some time next year. I think it’s important to move quickly on things,’ Barr said. ‘These things have a cost to the marketplace and businesses. I think at some point the government has to fish or cut bait.’
Barr said that the Justice Department review was not limited to antitrust, but that looking for anti-competitive behavior was ‘front and center.’
‘The question is that when you have the kind of market power that some companies have in their market, then some conduct that may have made sense when they were the insurgent company in a growing industry can become anti-competitive because it ends up fortifying the monopoly,’ he said.
The attorney general, however, also cited his previous work for Verizon Communications, in arguing that big companies provided some benefits to consumers, particularly in telecommunications.
‘Big is not bad,’ he said. ‘I think in certain network industries you can be too Balkanized and no one has the scale necessary for the kind of innovation that we’re seeing.’
President Donald Trump has relentlessly criticized the big tech companies by name in recent months. He frequently asserts that companies such as Facebook and Google are biased against him and conservative politicians.
WHAT THE INVESTIGATION WILL LOOK INTO AND WHO IS IN THE FIRING LINE
The investigation will look into whether Facebook, Amazon, Google and Apple are unfairly dominating the market and exerting too much control over the internet.
It will look at how each of the businesses has expanded in recent years, and how they plan to move (or have already moved) into different services than the ones they were designed for.
How Amazon has moved from being a seller of books to seller of all things and now a giant in the cloud storage space too may be an example of this.
Facebook, for its part, has gone from connecting friends online to owning WhatsApp, another telecomms mammoth, Instagram and now it has set its sights on its own currency to allow transactions within its services.
Google will likely face questions over how its algorithms determine what the public sees when they search for things online.
The DoJ said it wants to use the investigation to determine whether there are any antitrust issues, then it will decide how to handle them.
The investigation mirrors another which is already underway by the House Judiciary subcommittee.
It also coincides with a Financial Services Committee probe into Libra, the cryptocurrency Facebook wants to spearhead.
The focus of the investigation closely mirrors a bipartisan probe of Big Tech undertaken by the House Judiciary subcommittee on antitrust.
Its chairman, Rhode Island Democrat Rep. David Cicilline, has sharply criticized the conduct of Silicon Valley giants and said legislative or regulatory changes may be needed. He has called breaking up the companies a last resort.
In June, Reuters reported the Trump administration was gearing up to investigate whether Amazon, Apple, Facebook and Alphabet’s Google misuse their massive market power, setting up what could be an unprecedented, wide-ranging probe of some of the world´s largest companies.
The Justice Department said the review ‘is to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and to ensure Americans have access to free markets in which companies compete on the merits to provide services that users want.’
In July, the House Judiciary Committee’s antitrust panel pressed executives from the four firms about their competitive practices and noted that Google, Facebook, Amazon had a rising share of key markets.
Congress held a series of hearings last year looking at the dominance of major tech companies and their role in displacing or swallowing up existing businesses. It is rare for the government to seek to undo a consummated deal.
Facebook, for its part, has gone from connecting friends online to owning WhatsApp, another telecomms mammoth, Instagram and now it has set its sights on its own currency to allow transactions within its services. Facebook CEO Mark Zuckerberg is pictured
Jeff Bezos, founder and chief executive officer of Amazon is pictured. Market research company eMarketer expects Amazon to account for 52% of all online sales in the U.S. this year, up from 48% last year
The most famous case in recent memory is the government’s effort to break up Microsoft Corp. The Justice Department won a preliminary victory in 2000 but was reversed on appeal. The case settled with Microsoft intact.
‘There is growing consensus among venture capitalists and startups that there is a kill zone around Google, Amazon, Facebook and Apple that prevents new startups from entering the market with innovative products and services to challenge these incumbents,’ said Representative David Cicilline, a Democrat who heads the subcommittee.
Technology companies face a backlash in the United States and across the world, fueled by concerns among competitors, lawmakers and consumer groups that they have too much power and are harming users and business rivals.
Senator Marsha Blackburn, a Republican, praised the investigation and said a Senate tech task force she chairs would be looking at how to ‘foster free markets and competition.’
One antitrust expert believes the DOJ investigation may prompt regulators to interpret U.S. competition law in new ways.
University of Pennsylvania law professor Herbert Hovenkamp said the companies may have been their abusing market power by collectively buying hundreds of startups in recent years to devour their technology and prevent them from growing into formidable rivals.
Traditionally, antitrust regulators have only sought to block acquisitions involving large companies in adjacent markets. But Hovenkamp says U.S. antitrust law is broad enough for regulators to consider the potential damage wrought by relatively small deals, too.
Is Big Tech headed for a big breakup?
The U.S. Justice Department has announced a major antitrust investigation into unnamed tech giants, while the House Judiciary Committee has begun an unprecedented antitrust probe into Google, Facebook, Amazon and Apple over their aggressive business practices, and promises ‘a top-to-bottom review of the market power held by giant tech platforms.’
In addition, at least two 2020 presidential hopefuls have expressed support for breaking up some of technology’s biggest players amid concerns they have become too powerful.
Experts say breakups are unlikely in the short term, and Rep. David Cicilline, the Rhode Island Democrat who leads the subcommittee pursuing the House investigation, called such measures a ‘last resort.’ But even without that, Facebook, Google, Amazon and Apple could face new restrictions on their power.
Google, Facebook, Amazon and Apple have so far declined to comment on the investigations.
Here’s a look at the cases that could be brought against them and what their defenses could be.
With 2.4 billion users, $56 billion in revenue last year and a name that’s synonymous with social media, Facebook is certainly big. But is it an illegal, competition-crushing monopoly?
Federal regulators are already investigating the company’s privacy practices. But the antitrust question has been rumbling in the background, with critics calling for spinning off WhatsApp and Instagram. Democratic presidential candidate Elizabeth Warren has called for breaking up Big Tech, as has Chris Hughes, a co-founder of Facebook. Former Vice President Joe Biden has said that he is open to the idea.
Critics believe a breakup is needed because Facebook can squash competitors either by buying them or using its enormous resources to mimic services they offer – as it’s done with Snapchat, for example.
Critics believe a breakup is needed because Facebook can squash competitors either by buying them or using its enormous resources to mimic services they offer
Facebook executives have been calling broadly for regulation, though nothing that comes close to breaking it up. In a recent statement, the company’s vice president of global affairs, Nick Clegg, said Facebook ‘accepts that with success comes accountability. But you don’t enforce accountability by calling for the breakup of a successful American company.’ CEO Mark Zuckerberg has called for ‘new rules’ in four areas: harmful content, election integrity, privacy and data portability.
Facebook has also stressed that it has competitors in messaging and digital communication, including Apple and Google.
New York University law professor Eleanor Fox said that because antitrust law focuses on companies that raise prices too much, and Facebook is free, it will be a tough to break up the business. And Facebook commands less than a quarter of worldwide digital advertising, well behind Google.
Warren, however, has laid out plans for legislation that targets companies with more than $25 billion of annual revenue. It would limit their ability to expand and force parts of their business to operate as separate entities.
As Google becomes a leading mail provider, search engine and advertising platform, federal regulators are starting to wonder if it needs to be knocked down a bit.
Critics say Google’s dominance in search has allowed it to squash rivals – notably because Google can show its own products above competitors’ or feature its own ads prominently.
Google might argue it doesn’t have an obligation to do business with its rivals at all – an argument that other companies have made when faced with similar challenges, said Sandeep Vaheesan, legal director for Open Markets Institute, which advocates breaking up monopolies.
Google CEO Sundar Pichai appears before the House Judiciary Committee to be questioned about the internet giant’s privacy security and data collection in December 2018
It’s Google’s technology and Google can use it as it wishes, goes one line of reasoning.
Google has also faced scrutiny over the practices it uses to get its search and other products featured on smartphones. Some say Google imposes too many self-serving regulations on smartphone makers who use Google’s Android operating system.
But Google might simply argue that Android users like Google products and want them on their phones.
Under existing laws, it is difficult to make the case that Google has monopoly power, ‘even though I think a lot of people think it’s really obvious,’ Fox said.
Since its opening in 2008, Apple’s pioneering app store has given customers instant access to services that entertain, enlighten and engage. But it’s also a place where Apple controls all the access and sets commission rates for subscriptions and other purchases made through the apps.
The Justice Department is most likely to focus on whether Apple is abusing its veto and pricing power to throttle and gouge its competition. The commissions it collects are also the subject of a consumer lawsuit that the Supreme Court recently cleared to proceed.
App makers periodically allege that they are blocked because Apple wants people to use its own services. In a recent example, several makers of apps for managing the amount of time kids can use their iPhones say they were kicked out of the store not long after Apple introduced its own screen-management controls.
The Justice Department is most likely to focus on whether Apple is abusing its veto and pricing power to throttle and gouge its competition. Apple CEO Tim Cook is pictured
Apple says it typically blocks only apps with buggy software or features that invade users’ privacy. The company likens its rules to merchants deciding what products to carry. Apple also says its store includes apps that compete with its own products, including Google Maps and Google’s Chrome browser.
Also under criticism is the 30 percent cut that Apple pockets on new subscription sign-ups during the first year and a 15 percent slice for renewals. The app store is expected to generate about $16 billion in revenue this year.
Apple says the commissions cover costs for running the app store, including hiring people to review apps.
Antitrust regulators could try to impose requirements that lower Apple’s commissions or, in a worst-case scenario, force it to spin off the app store. The latter option, though, could hurt consumers by making iPhones and other Apple products more cumbersome to use.
Wedbush Securities analyst Daniel Ives likened a breakup to ‘a complex and almost impossible Siamese twin operation.’
From an online bookseller, Amazon has grown into a gigantic e-commerce player with its tentacles in everything from web hosting to streaming video to groceries.
The European Union’s antitrust chief has been conducting an early-stage probe into whether Amazon is using data to gain an edge on third-party merchants, who are both its customers and rivals. Italy has been looking into whether Amazon abused its dominance by offering preferential treatment to companies that used Amazon’s own delivery-management services.
Cicilline, the congressman, said Amazon has identified bestselling products elsewhere, rolled out replicas under its own brand and then steered customers to its own products over those of its rivals.
When Warren tweeted in April that big tech companies like Amazon should be broken up, Amazon tweeted back: ‘Walmart is much larger.’
Amazon has grown into a gigantic e-commerce player with its tentacles in everything from web hosting to streaming video to groceries
Amazon CEO and founder Jeff Bezos made a similar case in a recent letter to shareholders: ‘Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores.’
But Amazon does dominate online.
Market research company eMarketer expects Amazon to account for 52% of all online sales in the U.S. this year, up from 48% last year.
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