Four of Silicon Valley’s biggest tech firms — Google, Amazon, Facebook and Apple — could face antitrust investigations from the Trump Administration and Congress.
After unusual negotiations on the subject, the Federal Trade Commission agreed to handle any potential investigations into Amazon and Facebook, while the Department of Justice would handle Apple and Google parent company Alphabet. On Monday, a House Judiciary subcommittee announced that it would begin its own investigation.
The moves come as critics on both the right and left raise serious questions about the role of large tech companies.
The list of critics includes everyone from former Trump adviser Steve Bannon to Democratic presidential candidate Elizabeth Warren. President Donald Trump has also frequently targeted the companies, arguing without evidence that they are biased against conservatives and his Administration specifically.
Facebook, Twitter and Google are so biased toward the Dems it is ridiculous! Twitter, in fact, has made it much more difficult for people to join @realDonaldTrump. They have removed many names & greatly slowed the level and speed of increase. They have acknowledged-done NOTHING!
— Donald J. Trump (@realDonaldTrump) December 18, 2018
Although Democrats and Republicans “may disagree about the specific approach that ought to be taken … from both ends of Pennsylvania Avenue, you’ve got an impressive broad coalition that says, hit them harder,” says William F. Kovacic, former FTC chairman under the George W. Bush Administration.
Here are answers to some questions you may have about the antitrust actions.What is antitrust law?
Concerned about the growing power of large railroads and oil companies, 19th century progressives began lobbying for stronger government regulation of monopolies and large corporations.
In 1890, Congress passed the Sherman Antitrust Act, which prohibited “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce,” such as the Standard Oil Trust. The Clayton Act of 1914 expanded the definitions of anticompetitive activity, and the same year, the Federal Trade Commission was established to break up monopolies.Has the tech industry faced antitrust cases before? JASON REDMOND—AFP/Getty Images The Microsoft logo is pictured during the annual Microsoft shareholders meeting in Bellevue, Washington on November 29, 2017.
The biggest antitrust case involving a major tech firm occurred under the Clinton Administration. From 1992 to 2001, the Department of Justice investigated whether Microsoft was abusing its market power with the Windows operating system to push consumers to use its Internet Explorer web browser.
Matt Murphy, a partner at venture capital firm Menlo Ventures, said the case ultimately fizzled out as Microsoft missed some key changes in how consumers use technology in the early 2000s. Eventually, rather than breaking up, the company settled with the Department of Justice, agreeing that they would not make exclusive licensing deals with computer manufacturers and would work better with third-party developers.
“Microsoft’s strategy became stale, they missed the move to mobile, so the regulators didn’t need to come in and split the company up,” he said. “It was companies like Apple who came in and created the mobile ecosystem, and Google who came along after that, and [Amazon Web Services] who created the new wave consuming enterprise technology. My point is that big companies were forced to innovate by their competitors, and that’s what keeps them more on their toes than, you know, DOJ.”
More recently, in 2013, a Federal Trade Commission investigation into Google came up emptyhanded.How likely are the antitrust cases to succeed?
Experts note that antitrust cases are rare in part because regulators only like to bring cases they are sure to win. But even the potential for investigation can cause companies to rethink their approaches.
In a research note, analysts at investment banker Raymond James said the possible investigations could make it harder for the companies to continue buying up competitors.
“The biggest impact may be that future acquisitions of size will be much harder to do,” they wrote.How do Congress’ antitrust investigations work?
Unlike the Federal Trade Commission and the Department of Justice, Congress has no enforcement power on antitrust violations. But that doesn’t mean its investigation won’t matter.
Instead, Kovacic argues that the House investigation could help build support to change antitrust laws to give regulators more power to go after tech monopolies, create new regulatory agencies to oversee Silicon Valley companies or even just to give the business owners second thoughts about their next corporate moves.
Regardless of the outcome, an antitrust investigation is “the equivalent of having the police car on the expressway that causes everybody to slow down a bit,” Kovacic says.What role does the President have in antitrust investigations? Al Drago—Bloomberg/Getty Images Tim Cook, chief executive officer of Apple Inc., speaks with U.S. President Donald Trump during an American Workforce Policy Advisory board meeting in the State Dining Room of the White House in Washington, D.C., U.S., on Wednesday, March 6, 2019.
Though President Trump has encouraged antitrust investigations into the tech firms in interviews and tweets, he theoretically has no authority to demand them. Federal Trade Commission and Department of Justice antitrust investigations are historically independent from the White House, and regulations do not permit FTC commissioners to all be from the same political party.
In November, Donald Trump had told Axios on HBO, “I leave it to others, but I do have a lot of people talking about monopoly when they mention those three [Facebook, Amazon, and Google] in particular.”
He has routinely criticized Amazon owner Jeff Bezos, who also owns The Washington Post, and has argued for the U.S. Postal Service to raise the rates it charges the company. In December, a Trump-appointed commission recommended that the USPS raise those rates.
…and the Amazon Washington Post do nothing but write bad stories even on very positive achievements – and they will never change!
— Donald J. Trump (@realDonaldTrump) July 29, 2018
….In my opinion the Washington Post is nothing more than an expensive (the paper loses a fortune) lobbyist for Amazon. Is it used as protection against antitrust claims which many feel should be brought?
— Donald J. Trump (@realDonaldTrump) July 23, 2018
Trump has also argued, without evidence, that Google and Facebook are biased toward conservatives.
So surprised to see Conservative thinkers like James Woods banned from Twitter, and Paul Watson banned from Facebook! https://t.co/eHX3Z5CMXb
— Donald J. Trump (@realDonaldTrump) May 3, 2019
The wonderful Diamond and Silk have been treated so horribly by Facebook. They work so hard and what has been done to them is very sad – and we’re looking into. It’s getting worse and worse for Conservatives on social media!
— Donald J. Trump (@realDonaldTrump) May 3, 2019
Google search results for “Trump News” shows only the viewing/reporting of Fake News Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD. Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal? 96% of….
— Donald J. Trump (@realDonaldTrump) August 28, 2018
In February, the Federal Trade Commission launched a special task force to monitor the tech industry.