Big Trouble for Big Tech as DOJ announces Antitrust Review

After a good deal of anticipation, the U.S. Department of Justice announced Tuesday it was opening a broad and sweeping antitrust review of some of Big Tech’s biggest firms.  While the department didn’t mention any names, the Wall Street Journal reported it was acting on “new Washington threats” from Amazon, Apple, Facebook, and Google.  It is the boldest action yet against the Silicon Valley giants, and comes off the heels of a rocky week on Capitol Hill.  The announcement is sure to attract praise from the likes of both Sens. Ted Cruz (R-TX) and Elizabeth Warren (D-MA)— for different reasons.

Makan Delrahim, head of the Antitrust Division at the Department of Justice, announced a broad review of Big Tech companies on Tuesday.

The Antitrust Division will review “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.”  DOJ promises to do so “in an objective and fair-minded manner.”  They also said they will take in to account the “widespread concerns” about “search, social media, and some retail services online,” expressed by consumers, businesses, and entrepreneurs.  It sounds very much like a call for outside input, from those in and out of the tech industry.

Today’s announcement did not entirely come out of the blue either.  In June, multiple reports indicated that the DOJ and Federal Trade Commission were planning to divide up responsibility in investigating the big four: Justice would take Apple and Google, while the FTC would get Amazon and FacebookJason Del Rey of Recode reported the FTC would pursue three lines of questioning against Amazon, related to its logistics service, competitive practices, and its Amazon Prime bundles.  Last week, the House Judiciary Committee held explosive antitrust hearings against tech companies, drawing questions from members of both parties.  Facebook was blasted over its attempts to enter the cryptocurrency market, Amazon for its aforementioned relationships with its own sellers, and Google over fake listings on Google Maps.

Facebook’s Matt Perault, Amazon’s Nate Sutton, and Apple’s Kyle Andeer, sworn in to a hearing of the House Judiciary Committee on July 16.

It’s also a good time to go after Big Tech politically.  Across the spectrum, sentiment ranges from general antitrust wariness and concerns about data and privacy on the left to complaints about free speech and censorship on the right.  Breaking up— or at least going after— Big Tech is famously one of the few things both Cruz and Warren can agree on.  Silicon Valley hasn’t had anywhere close to as hostile an administration as the one that exists now.  President Trump has been vocal in his belief that tech companies, and other social media platforms deliberately target and discriminate against conservatives.  Last August, he also warned that Big Tech could be a “very antitrust situation.”

While no companies were able or willing to respond to requests for comment from numerous outlets by press time, investors were not nearly as reluctant to make their feelings heard.  Shares of Facebook, Amazon, and Alphabet each fell by more than 1% Tuesday at the news, and Apple’s price fell as well.  As this is only Day 1 of what’s likely to be a multiyear probe, speculation abounded as to its reaches and possible results.  Google, in particular, has already been spared before, and Facebook has, at least publicly, championed increased regulation.  In an industry defined by change, several business models and operations may look quite different in the future, whatever the outcome.

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Robert Martin (CN Staff)

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