|20 August, 2019

Tech will struggle to evade U.S. antitrust octopus

The fragmented approach has its perks, though, especially when federal regulators are spread too thinly, or inclined to be hands-off

A 3D printed Whatsapp logo is seen in front of a displayed stock graph in this illustration taken April 28, 2016.

A 3D printed Whatsapp logo is seen in front of a displayed stock graph in this illustration taken April 28, 2016.

Reuters/Dado Ruvic

NEW YORK - America’s approach to antitrust is a tangled mess – but sometimes that can be a good thing. Take Facebook and Apple, who may soon face state-level probes into their business practices as well as two investigations by federal agencies. The competing approaches are likely to ensure a more robust outcome.

Around 20 state attorneys general are thinking of investigating big tech companies, which also includes Amazon and Alphabet, the Wall Street Journal reported on Monday. The U.S. Department of Justice announced a review of online marketplaces in July and Federal Trade Commission Chairman Joe Simons, whose agency is also undertaking a fact-finding mission, said he was prepared to break up Silicon Valley companies that violate the spirit of competition.

Generally, government agencies try and coordinate their efforts. When the United States sued Microsoft for being anti-competitive in 1998, it had about 20 state litigators on its side. Sometimes, though, there’s conflict. Federal regulators are on board with T-Mobile US’s $26 billion purchase of mobile operator Sprint. Yet more than a dozen state-level prosecutors are suing to stop the merger because they think consumers will end up paying more for cellphone services.

The fragmented approach has its perks, though, especially when federal regulators are spread too thinly, or inclined to be hands-off. Think of vehicle emissions rules, where California has taken a tougher view than the Trump administration. Auto companies including General Motors, Toyota Motor and Fiat Chrysler Automobiles have decided to meet the Golden State’s standards anyway, partly because the most populous U.S. state is a market that’s too big to brush off. California’s incoming data privacy standards could be the template for other state and even federal actions.

Regulators at all levels may find agreement on the competitive qualities of Silicon Valley, creating room for a Microsoft-like consensus. But it’s likely the states will take a tough line to show their consumer-champion credentials – especially as a presidential election is coming in 2020. For companies that fear wrestling a many-tentacled octopus rather than a single antitrust watchdog, that’s a nightmare. But if the goal is rigorous and thorough scrutiny over giant tech companies, it’s no bad thing.

CONTEXT NEWS

- A group of state attorneys general are planning to launch a joint antitrust investigation that could target Facebook, Amazon, Alphabet and Apple, the Wall Street Journal reported on Aug. 19 citing people familiar with the matter. The report said more than 20 states could participate.

- U.S. Federal Trade Commission Chairman Joe Simons said he was prepared to break up major technology companies if necessary in an interview published by Bloomberg on Aug. 13. The agency is leading a review of the sector.

- The U.S. Department of Justice announced on July 23 it was reviewing the practices of search, social media and online retail services to determine if they were engaging in anti-competitive practices.

(Editing by John Foley and Amanda Gomez)

© Reuters News 2019

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