Coverage: Department of Justice Launches Big Tech Probe

The Department of Justice has announced it will investigate the biggest technology companies in the U.S. for anti-competitive practices.

David Shepardson had the news for Reuters:

The U.S. Justice Department said on Tuesday it was opening a broad investigation of major digital technology firms into whether they engage in anticompetitive practices, the strongest sign the Trump administration is stepping up its scrutiny of Big Tech.

The review will look into “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the Justice Department said in a statement.

The Justice Department did not identify specific companies but said the review would consider concerns raised about “search, social media, and some retail services online” — an apparent reference to Alphabet Inc, Amazon.com Inc and Facebook Inc, and potentially Apple Inc.

Forbes’ Rachel Sandler supplied the background:

Last month, the DOJ and FTC reportedly decided which agency was going to investigate each of the largest tech companies, with the DOJ getting Google and Apple and the FTC getting Facebook and Amazon. The DOJ review will may encompass all four companies,  according to the Wall Street Journal. 

When it comes to Facebook and Amazon, the DOJ might explore different tech practices or legal theories than the FTC, the Wall Street Journalreported. Both the FTC and DOJ are coordinating their efforts.

At the same time, the House of Representatives is launching a sweeping investigation into Google, Facebook, Amazon and Apple, and results of the investigation may inform changes in antitrust laws that would make it easier to break up these companies.

Barbara Ortutay and Rachel Lerman summarized the cases that can be brought against the FAANG group:

FACEBOOK

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 .

GOOGLE

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.

APPLE

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.

If it opens an investigation, 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.

AMAZON

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.”