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US antitrust enforcement comes back from the dead

As tech companies acquired billions of users, and competition has withered, the United States paid on
June 3 · Issue #336 · View online
The Interface
As tech companies acquired billions of users, and competition has withered, the United States paid only passing interest to antitrust concerns. Facebook’s acquisitions of WhatsApp and Instagram were approved without a hitch; Amazon successfully crushed other online retailers by temporarily lowering prices; Google began promoting its own search results (and affiliate marketing links) over those of competitors like Yelp and Expedia.
But perceptions of the internet giants began to turn in the aftermath of the 2016 election, which also produced a House of Representatives controlled by Democrats, and a swelling field of Democratic presidential candidates (led by Sen. Elizabeth Warren) who increasingly favor antitrust enforcement.
That leads us all to this weekend, and today, when sentiment appeared to turn finally — and in a bipartisan manner — in favor of a Big Tech reckoning. The sheer amount of investigations and potential investigations is dizzying, so let’s break down who’s doing what, and to whom.
Perhaps most prominently, on Monday the House announced a wide-scale investigation into Facebook, Google, and other tech giants to determine whether they have crushed competition in a way that harms consumers. Here’s Tony Romm and Elizabeth Dwoskin in the Washington Post:
The probe, announced Monday by Rep. David Cicilline (R.I.), the leader of the House’s top anti-trust subcommittee, is expected to be far reaching and comes at a moment when Democrats and Republicans find themselves in rare alignment on the idea that the tech industry has been too unregulated for too long. The sentiment spurred a sharp sell-off in tech stocks to start the week.
Cicilline said the investigation won’t target one specific tech company, but rather focus on the broad belief that the “Internet is broken,” he told reporters. In doing so, he pointed out problematic practices at tech giants such as Google, which has faced sanctions in Europe for prioritizing its own services in search returns over those of its rivals, and Facebook, which Cicilline criticized for acquiring competitors or copying their services to ensure its continued dominance in social networking.
Amazon and Apple also could figure into the committee’s early plans, he said, cautioning the goal is a broader look at the industry.
Cicilline told reporters that the investigation should include public hearings and subpoenas. It’s less clear, though, where all this is going. Forced breakups? New regulations? I suppose we have to wait for the investigation to proceed before we have a good idea of that.
But it is also worth noting that in the past two years we have seen the House rigorously investigate (nonexistent) bias against conservatives on social platforms; and (existent) problems related to data privacy and platform abuse, and the end result of all that was absolutely nothing. (Some people did have to spend a dangerous amount of time watching Diamond and Silk testify, however.)
Still, even if we have reason to be skeptical of the House’s inquiry, the investigations into Big Tech are multiplying. Let’s break them down by company. (And shout out to The Information’s Big Tech Investigations tracker, which helped me with this.)
  • The Federal Trade Commission is currently investigating whether the Cambridge Analytica data privacy scandal means that Facebook violated its 2011 consent decree to protect users’ private information. It is separately investigating a 2018 data breach that exposed login information for millions of users. A multibillion-dollar settlement is expected to be reached.
  • The FTC will also have jurisdiction over a potential antitrust inquiry, multiple outlets reported. It’s unknown whether the FTC is actually planning an antitrust investigation at this point.
  • The Wall Street Journal reported Friday that the Justice Department is preparing an antitrust case against Google focused on search and its other businesses. It’s unclear what the proposed remedy would be.
  • The FTC has been conducting a separate privacy investigation into Google that is expected to be concluded soon, according to the New York Times.
  • The FTC has been granted jurisdiction over certain competition issues, according to the Journal. (The agency was last seen approving the Whole Foods acquisition in 2017.)
  • No investigation is underway yet. But Tony Romm says the FTC getting jurisdiction likely means that one is coming.
Why all this antitrust interest, you may be asking, if for the most part the above companies offer their services cheaply or for free? After all, recently antitrust regulation has been applied only to companies that reduce competition and raise prices for consumers. Jacob M. Schlesinger explores the issue in the Journal:
“Although accessing services for free may appear to be an attractive proposition, this zero-price may in fact be too high, as consumers could be extracting greater value in return for their data,” said a March report commissioned by the British government, written by Jason Furman, who was former President Obama’s chief White House economist. The report also suggests that data-privacy concerns—a nonmonetary “cost” borne by consumers using digital platforms—might be better addressed with more competition, if different companies tried to lure customers by offering tighter protections.
The huge share of the digital advertising market controlled by Google and Facebook also means they can charge more for those ads than they could in a more competitive market—costs that may be passed on to consumers with higher prices for the goods they buy online, the reports say. They add that the prominent placement of ads associated with those platforms also degrades the quality of the user experience for consumers.
So what’s next? The very boring answer is that we wait — possibly for a year and a half or more, according to an expert The Information consulted. In some cases, investigations have yet to begin — all we know is that they may be about to begin. So I’ll save any hot takes for when we’re a bit further down the road. In the meantime, it’s enough to say that the antitrust landscape in the United States is rapidly coming to look a lot more like Europe’s. And while much could go wrong between now and any enforcement action, the fact that federal agencies are taking competition more seriously is welcome news indeed.

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And finally ...
I think the answer to the question here is … maybe?
Josh Sternberg
Is this the saddest frame from Facebook's brand campaign that ran over the weekend?
8:41 AM - 3 Jun 2019
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