A forthcoming investigation involving more than 20 states attorneys general puts further legal pressure on Google and potentially other tech companies. Google is now being informally probed by the Justice Department, the Senate, and the House Antitrust Subcommittees. This is in addition to other investigations currently being conducted in Europe.
To a similar degree, Facebook, Apple and Amazon are also being investigated by Congress and the Federal Trade Commission or Justice Department for potential anti-competitive behavior.
‘A major escalation.’ Characterized as “a major escalation in U.S. regulators’ efforts to probe Silicon Valley’s largest companies,” the state attorneys general investigation was first reported by the Washington Post yesterday. However, it was widely expected based on earlier public statements and discussions. Reportedly, a formal announcement will come next week.
However, according to the Washington Post, it’s not yet clear whether Facebook or other companies might become part of the states’ investigation. CNN is separately reporting that it will focus on “Google advertising practices.” Not much detail is available beyond that, except for vague statements about Google “dominating” online advertising.
According to recent eMarketer data, however, Google’s share of online advertising this year will be down slightly, to just over 37%. Facebook will capture 22% of U.S. digital ad revenue, while Amazon is taking some share from both according to the firm.
States don’t have as much power as feds. States have the power to fine companies for the violation of their laws (e.g., consumer protection) and the ability to ask for policy changes, but they don’t have the same power as federal regulators to seek the break-up of companies or the “unraveling” of acquisitions. As a practical matter, the action by the states adds more pressure and cost for the tech giant(s) and could indirectly impact the scope or depth of the federal investigations.
The states were involved in the Microsoft antitrust case in the 1990s, although they didn’t lead it.
It’s important to note that these various investigations could go on for several years, with little or no change in the interim — except that Google and Facebook are less likely to make significant acquisitions. In addition, a change in the political leadership in Washington after 2020 could also impact these investigations, although they have bi-partisan support.
Why we should care. In 2013, the FTC closed its antitrust investigation of Google, declaring, “The law protects competition, not competitors.” Since that time the European Commission has fined Google more than $9 billion in three separate antitrust cases, which Google is appealing.
Facebook was recently fined $5 billion for data and privacy violations by the FTC. However, these fines have had limited impact and the market hasn’t punished either company. Accordingly, regulators and legislators may be looking for policy changes or more structural changes in addition to any potential fines. Indeed fines, regardless of their size, are likely to be seen as ineffectual.
Yet, what happened with Microsoft may be predictive of the future for Google and others. The company was determined to be a monopoly in April of 2000 and directed to be split into two halves. That never happened.
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