Justice Department launching broad antitrust review of Big Tech

Posted at 4:42 PM, Jul 23, 2019

Are tech giants like Facebook, Google, Amazon and Apple becoming too powerful?

The Justice Department is launching a formal antitrust review of the nation’s biggest tech companies, raising the stakes for Silicon Valley after weeks of anticipation in Washington.

The review appears wide-ranging and could cover conduct from numerous firms. Policymakers in Washington have increasingly focused on complaints of anti-competitive behavior concerning Amazon, Apple, Facebook and Google; while those companies were not named by the Justice Department on Tuesday, the agency indicated it will look into areas where those companies are dominant players.

“The Department’s review will consider the widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online,” the DOJ said in a press release Tuesday afternoon. “The Department’s Antitrust Division is conferring with and seeking information from the public, including industry participants who have direct insight into competition in online platforms, as well as others.”

The DOJ and the Federal Trade Commission had previously negotiated to divide up oversight jurisdiction over the tech industry, with Justice assuming responsibility for Google. But the new, broader probe is separate from a potential Google-specific investigation, according to the Wall Street Journal, which was the first to report the review.

Amazon and Apple didn’t immediately respond to requests for comment. Facebook declined to comment, and Google also declined to comment but referred CNN to testimony company executives delivered before Congress last week.

The DOJ announcement follows a week of congressional hearings that were bruising for the tech industry. Lawmakers slammed Facebook over its attempts to enter the financial services industry with a new digital currency, Libra. Amazon faced tough questions over its relationship to third-party sellers on its own platform, and Google over fake listings on Google Maps.

Rep. David Cicilline, a New Jersey Democrat who heads the House Judiciary Committee’s antitrust panel, on Tuesday sharply criticizedthe three companies in letters to their executives, accusing the companies of providing “evasive” testimony and demanding they provide further answers. Ciciline is leading what he has described as a “top-to-bottom” investigation into the tech platforms.

The DOJ announcement also comes as Facebook braces for a multi-billion-dollar fine from the Federal Trade Commission that was spurred by an investigation into numerous privacy mishaps by the social media giant during and after the 2016 election.

The announcement also signals that a deeper look at the tech industry has the backing of Attorney General William Barr, who has voiced concerns about Silicon Valley.

“I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers,” Barr said during his confirmation hearing. “And you know, you can win that place in the marketplace without violating the antitrust laws, but I want to find out more about that dynamic.”

Despite the widening challenges facing tech companies in Washington, analysts said the long-term risk for the big players remains unclear.

“We ultimately believe this is more noise vs. the start of broader structural changes across the tech food chain and will likely result in business model tweaks and potential DOJ/ FTC fines in a worst case scenario rather than forced breakups of the underlying businesses,” according to a research note sent to investors Tuesday by the market research firm Wedbush Securities.