The New FTC Task Force: Will Tech Giants Face a Day of Reckoning on Antitrust?
Some antitrust lawyers are skeptical of the announcement last week that the FTC's Bureau of Competition is naming a 17-staff lawyer task force to examine antitrust issues around big tech—which could possibly include reviewing some past mergers.
March 06, 2019 at 12:15 PM
6 minute read
The original version of this story was published on Corporate Counsel
Some antitrust lawyers are skeptical of the announcement last week that the U.S. Federal Trade Commission's Bureau of Competition is naming a 17-staff lawyer task force to examine antitrust issues around big tech — which could possibly include reviewing some past mergers such as Facebook's acquisition of WhatsApp and Instagram.
The task force announcement came even as Facebook was reported to be negotiating with the FTC over a multibillion-dollar fine for violating a 2011 consent decree in connection with the Cambridge Analytica privacy scandal. The company shared millions of users' data with an app developer in 2014 that in turn sold data to Cambridge Analytica.The FTC started a probe of the incident last March. Facebook also has come under fire from German antitrust regulators for its advertising business model.
FTC Chairman Joseph Simons, a Republican who was appointed to the role by President Donald Trump last year and who prior to that was partner and co-chair of the antitrust group at Paul, Weiss, Rifkind, Wharton & Garrison, said the task force would monitor competition in the tech industry and take enforcement actions when warranted.
Bureau of Competition Director Bruce Hoffman said: ”By centralizing our expertise and attention, the new task force will be able to focus on these markets exclusively – ensuring they are operating pursuant to the antitrust laws, and taking action where they are not.”
The announcement comes as public and legislative concern is rising in the United States and Europe about the masses of data the companies are accumulating on individuals, their growing intrusion into every aspect of individuals' lives and the power that is giving them economically and politically. For instance, Congressman David Cicilline, (D-R.I.) who is chairman of the House Judiciary Committee's antitrust subcommittee, has told the Financial Times he's considering proposing to break up the big tech companies based on their function and services, similar to the Glass-Steagall Act that divided the investment and commercial functions of banks in the Great Depression but was partly repealed in the late 1990s.
But some antitrust lawyers are saying the commission already has studied the issues and held earlier hearings, yet approved the mergers and acquisitions. They're wondering if the commission really intends to take substantive action.<
Columbia University Law Professor Tim Wu, a prominent critic of technology and media concentration who was an adviser to the FTC from 2011 to 2012, tweeted:
I'm hoping the new @FTC tech platform task force finds the courage to re-consider some of the anti-competitive tech mergers of the last 10 years; tech is in need of a genuine shakeup
— Tim Wu (@superwuster) February 26, 2019
Henry C. Su, an antitrust trial and appellate litigation partner at Constantine Cannon in Washington, D.C. and San Francisco, who formerly was a trial lawyer at the FTC from 2011 to 2017, part of that time in the competition bureau, said Friday that, “there has been a lot of pressure in particular from Democrats for the FTC to do more to investigate big tech. One could interpret this as Chairman Simon's way of responding to that and let them know the agency is listening.”
Su pointed out that the Clayton Act and the Sherman Act empower the commission to regulate antitrust, but data privacy is more the purview of the consumer protection bureau.
“The big question in my mind coming out of this task force is you are going to monitor and investigate, but is there going to be a report or are you just going to initiate enforcement when appropriate and if you are, what are the grounds, if you are challenging transactions that previously have undergone review?” He said: “How do you articulate a case of harm based on a transaction that you previously reviewed and cleared? How do you distinguish between what you knew then and what you know now and decide whether what you are concerned about now relates to the acquisition or to developments that have happened since the acquisition?” The task force, however, could also bring cases based on anticompetitive conduct that are unrelated to specific acquisitions or mergers, he said.
While much of the controversy around tech in the last few years has concerned data collection, protection and unauthorized sharing, “I have read a lot of what was said and written and I don't see a compelling theory of competitive harm built around issues of privacy and data accumulation,” Su said.
Meanwhile, Silicon Valley attorney Gary Reback, who is of counsel at Carr & Ferrell and has represented companies in antitrust complaints at the FTC against Google, said on Friday , “I don't know why you would announce something like this with great fanfare if you didn't plan to do something. But they had all these hearings early on and nothing came of them. The commission, I think, is operating under something of a credibility gap from the last administration.”
Reback said the privacy issues and competition issues are separate but related, because users who are dissatisfied with the privacy policies of a company like Facebook, can't choose alternatives such as WhatsApp or Instagram because Facebook has bought them.
“Instagram and Whatsapp were the two potential competitors but they are now part of Facebook, so are they [the FTC] going to look at that monopolistic behavior and unwind those mergers?” he said. Given the many hearings already held, Reback said advocates for greater competition had been expecting more from the FTC than further study.
One would think the next step would be to bring some cases, not to study it some more. They've studied it already,” he said.
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