Facebook and Google face state-level antitrust investigations - Activate World

Facebook and Google face state-level antitrust investigations

Fifty state and territory attorneys general have announced new investigations into the market power and corporate behavior of big tech companies. Delivered from the steps of the United States Supreme Court by a bipartisan group of state officials, this is the latest action adding momentum to the scrutiny already underway by federal watchdog agencies and Congress. The states are focusing on Facebook and Google. 

Lunchtime Conversations:

  • Given the large number of bipartisan attorneys general involved, how likely is it that significant antitrust actions will be taken against Facebook and Google?
  • If you were the CEO of Facebook or Google, are there actions you would take now to show good faith? Would you wait or be proactive?
  • Congress has seemed ill-prepared for entering the uncharted territory of our digital age society. Will the court system be ready? If not, how can judges get up-to-speed?

Noteworthy:

  • California and Alabama are the only two states that have not joined the investigation.
  • The move by states and territories means that if parallel probes by the Department of Justice and Congress fizzle out, some even more aggressive state prosecutors could carry on the fight.
  • Google, Facebook, and Amazon have historically enjoyed wide regulatory freedom in the U.S., but are now facing numerous state and federal probes into their practices.

Storyline:

On Friday, Letitia James, the Democratic attorney general of New York, announced via a press statement that a bipartisan group was investigating Facebook. The news conference on Monday formally announced the Google investigation and discussed Facebook as well. 

The Google investigation, led by Texas Attorney General Ken Paxton, will determine if the company’s online dominance stifles competition in the online advertisement industry. Paxton said during a press conference outside the U.S. Supreme Court building that the investigation is “to determine the facts. Right now, it’s about advertising, but the facts will lead where they lead.”

According to the New York Times’ tracker, the big tech platforms are facing two Congressional, six state and local, and eight federal investigations. While the nature of the investigations varies between Google, Apple, Facebook, and Amazon, anti-competitive behavior is at the heart of many of the inquiries.

Historically, the federal government has taken the starring role in competition matters, including investigations into potential monopolies and mergers, and such inquiries involving the tech giants are underway.

However, states are potent actors in their own right, with the power to invoke local laws on antitrust and consumer-protection and to tap Washington’s antitrust statutes on behalf of their residents. When state attorneys general have banded together on a broad, bipartisan basis, they’ve managed to force major changes to other industries.

They forced billions of dollars in payments from Big Tobacco to pay health claims and finance antismoking campaigns in the 1990s. Two decades later, they helped reform unfair mortgage lending practices. More recently, states have led lawsuits against pharmaceutical companies they contend are responsible for the opioid crisis.

“The attorneys general have found they can actually rewrite the rules for entire sectors and individual companies through these cases,” said Rob McKenna, a former attorney general in Washington state and now a partner at the law firm Orrick. “The attorneys general have a lot of power here to achieve regulation by litigation.”

Sources: Axios, The New York Times, The Washington Post, The Verge

Photo by Christian Wiediger on Unsplash