The U.S. Department of Justice on Tuesday, July 23, opened a review into whether the U.S.’s biggest and most powerful technology companies have stifled competition or hurt consumers.
It said the probe will take into account “widespread concerns” about social media, search engines and online retail services. Its antitrust division is seeking information from the public, including those in the tech industry.
“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Makan Delrahim, the department’s chief antitrust officer, said in a statement. “The department’s antitrust review will explore these important issues.”
The announcement follows months of concern in Congress and elsewhere over the sway of firms like Google, Facebook, and Amazon.
The federal business watchdog will reportedly find that Facebook deceived users about how it handled phone numbers it asked for as part of a security feature and provided insufficient information about how to turn off a facial recognition tool for photos. Advertisers were reportedly able to target users who provided their phone number as part of a two-factor authentication security feature.
The Federal Trade Commission also reportedly plans to hand Google a multimillion-dollar fine over its handling of children’s information on YouTube. Europe has investigated and fined several major tech companies over the past several years.
“It seems like the nation’s law enforcement agencies are finally waking up to the threat posed by big tech,” said Stacy Mitchell of the Institute for Local Self-Reliance, which has criticized Amazon for stifling independent businesses. Mitchell testified at a House hearing last week.
NEW: DOJ announces antitrust probe into social media companies: “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands.” pic.twitter.com/L96cRYFUUt
— Nate Madden (@NateOnTheHill) July 23, 2019
President Donald Trump also has repeatedly criticized the big tech companies by name in recent months. He frequently asserts that they are biased against him and conservatives in general.
But Big Tech could also present a difficult target, as current interpretations of antitrust law don’t obviously apply to companies offering inexpensive goods or free online services. The Justice Department did not name specific companies in its announcement.
Shares of Facebook, Amazon, and Apple were down slightly in after-hours trading.
Traditional antitrust law focuses on dominant businesses that harm consumers, typically defined as price-gouging and similar behavior. But many tech companies offer free products that are paid for by a largely invisible trade in the personal data gleaned from those services. Others like Amazon offer consistently low prices on a wide array of merchandise.
“That is going to be a tough one for (regulators) to prove,” said University of Pennsylvania law professor Herbert Hovenkamp.
Beyond that, the companies could face scrutiny for buying up smaller rivals that might be a threat to their business.
For instance, Google bought YouTube in 2006 when it was still a fledging video site struggling to survive an onslaught of copyright infringement lawsuits, and acquired the technology for its now-dominant Android software for smartphones in an even smaller deal. Facebook snapped up Instagram — now the fastest-growing part of its business — in its infancy, and Apple bought the technology powering its ubiquitous Siri assistant.
Includes reporting from the Associated Press