Scrutiny Mounts as States Launch Facebook Antitrust Probe

Tech giants are under increasing pressure about their size and dominance, with President Donald Trump frequently criticizing them and some Democratic presidential candidates calling on them to be broken up.

by Levi Sumagaysay, The Mercury News / September 6, 2019

(TNS) — SAN JOSE, Calif. — Facebook is under antitrust investigation by the attorneys general of eight states and Washington, D.C., the second such probe it is facing amid a growing backlash against U.S. tech giants.

New York Attorney General Letitia James announced Friday that she is leading the investigation.

"Even the largest social media platform in the world must follow the law and respect consumers," she said in a statement. "I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk."

In July, Facebook acknowledged in its quarterly report that it is facing an antitrust investigation by the Federal Trade Commission.

Tech giants are under increasing pressure about their size and dominance, with President Donald Trump frequently criticizing them and some Democratic presidential candidates calling on them to be broken up.

In June, the House Judiciary Committee announced that it would start an inquiry into digital competition. The following month, the Department of Justice said it would begin a broad antitrust review into "market-leading online platforms." Most recently, reports say that states attorneys general are set to announce an antitrust probe into Google next week.

"We will use every investigative tool at our disposal to determine whether Facebook's actions may have endangered consumer data, reduced the quality of consumers' choices, or increased the price of advertising," James said Friday.

The state attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia are joining the probe.

Facebook said Friday that it has plenty of competition.

"People have multiple choices for every one of the services we provide," said Will Castleberry, the company's vice president of state and local policy, in a statement. "We understand that if we stop innovating, people can easily leave our platform. This underscores the competition we face, not only in the U.S. but around the globe. We will work constructively with state attorneys general."

But critics of the social media giant applauded the action.

"It's way overdue to stop the relentless push by both Google and Facebook to dominate our digital lives," Jeff Chester, executive director of advocacy group Center for Digital Democracy, said Friday. "This new AG action should force greater competition, consumer protection, and ensure that the two monopolists better serve democracy."

Donald Polden, emeritus professor of law at Santa Clara University, has wondered how antitrust laws might be applied to today's tech giants because it might be tough to prove harm to consumers.

He said Friday that after reading what the state attorneys general intend to focus on in their probe of Facebook, the mention of advertising prices might be the one to watch.

"That gets the government a little closer to legitimate concern," Polden said. "They can define that with some sort of precision."

Facebook and Google together command about 60% of online advertising, although recent reports say Amazon and Snap are starting to chip away at the two companies' market dominance. According to a forecast by eMarketer, Amazon's share of online ads is expected to grow to 8.8% this year.

Might these antitrust investigations lead to divestitures? Some critics of Big Tech, such as Sen. Elizabeth Warren, D-Mass., have called for tech mergers to be undone. In Facebook's case, its big purchases of note include Instagram and WhatsApp.

"Traditionally once a merger is done, enforcers and courts are reluctant to undo them because it's an incredibly messy sort of thing," Polden said. But he said it's neither impossible nor unprecedented, citing a 1960s Supreme Court decision ordering the divestiture of Vons grocery stores in California.

While the probe by the state AGs is among the first announced antitrust actions against a big U.S. tech company by American officials since the United States sued Microsoft a couple of decades ago, the European Union has issued billions of dollars worth of fines against Google in the past two years in three separate antitrust actions, and is also investigating Amazon over antitrust.

©2019 The Mercury News (San Jose, Calif.). Distributed by Tribune Content Agency, LLC.

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