By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
The WSJ ran an exclusive today, suggesting that state attorneys general may begin to cooperate more closely with the feds to take on Google, according to State Attorneys General to Meet With Justice Officials to Coordinate on Google Probe:
State attorneys general will meet with U.S. Justice Department attorneys next week to share information on their respective probes of Alphabet Inc.’s Google unit, a step that could eventually lead to both groups joining forces, according to people familiar with the matter.
The meeting is seen as the start of a periodic dialogue that could expand into more formal cooperation as the probes continue, the people said.
To date, federal and state authorities involved in the probe haven’t shared investigative materials about their concurrent probes of Google, some of the people said.
At least seven state attorneys general who are part of the investigation have been invited to the meeting, one of the people said. The group—comprising the executive committee of the states’ investigation into Google—is led by Ken Paxton, the Texas attorney general.
Recall, as does the Journal, that state AGs have in the past teamed up with the Department of Justice (DoJ) when the parties are serious about antitrust enforcement – something the feds have been loath to do for quite some time. But during the Clinton administration, the DoJ did undertake enforcement actions, such as its suit against Microsoft, which was brought with the cooperation of several state GAs. According to the WSJ:
State antitrust enforcers often team up with their federal counterparts, including when the Justice Department and a group of 21 attorneys general worked together when they sued Microsoft in the late 1990s.
Silicon Angle reports in DOJ and state attorneys general could join forces in Google antitrust probe that the state probe of Google began last year:
Attorneys general from 48 U.S. states, plus the District of Columbia and Puerto Rico launched a formal antitrust investigation into Google last year, headed by Texas Attorney General Ken Paxton. At least seven of those attorneys general are expected to attend this week’s meeting.
Attorney General William Barr commented on the significance of the size of the coalition of state AGS. Per the WSJ:
The size of the coalition reflects “the importance of these issues to Americans across the country, regardless of location or political persuasion,” U.S. Attorney General William Barr said last month in a speech to the National Association of Attorneys General in Washington.
Now, what, pray tell, are these state AGs and the DoF looking to investigate? The Journal reports:
The state and federal investigations have given considerable focus to Google’s powerful position in the lucrative market for online advertising. The company’s dominant position in online search and possible anticompetitive behavior by Google in its Android mobile operating system have also drawn scrutiny, according to the people familiar with the matter.
To clarify that latter statement, Bloomberg takes a bow in State AGs, U.S. Justice Lawyers to Discuss Google Probe: WSJ:
A coalition of 48 states opened an antitrust investigation that will dig into Google’s operations in search and mobile software, going beyond an initial focus on the company’s advertising business, Bloomberg News said in November, citing two people familiar with the probe.
The state officials met privately in Denver in November to help prepare for an investigation that will likely present challenging competition issues, one of the people said at the time. The states were also planning to map out a strategy for dividing the workload of the investigation, said two of the people.
Now, I should note here, that no less an authority than Bill Black has noted that the 48-state investigation may actually not be all it’s cracked up to be; see 48 States to Investigate Google: Anti-Trust or Politicking? One thing Black zeroed in on – and which leapt out at me also, is that the Texas AG, Ken Paxton, is taking a lead role in the state probe. But Republicans, and particularly conservative ones, are inherently hostile to the notion of aggressive anitrust enforcement. The wrinkle here is that Paxton appears to have targeted the tech companies for ideological reasons – because they’re “liberal” – rather than for any antitrust principle. How this plays out in the realm of antitrust enforcement is anybody’s guess.
Another point that Black highlights is the dependence of state AGs on campaign contributions – a reason that California didn’t sign on to take on Google, a major source of funds.Will the state AG’s follow through on a tough antitrust agenda, with all that implies for circumscribing their ability to raise raising campaign funds? Again, the answer is unclear. I think.
What that means is that we must watch very carefully to see whether this state investigation of Google is intended to draw blood, or whether it will remain just some elaborate form of kabuki.
That all being said, and despite the basic Republican hostility, going back at least to the Reagan years, for aggressive antirust enforcement, the WSJ quotes US AG Barr as expressing support for a broad focus, according to the WSJ:
Mr. Barr hinted that a broad approach might be best.
“Many online platforms are not only big, but also offer a wide breadth of products and services,” he said. “Antitrust enforcers therefore must take an equally broad view of these platforms’ offerings, and the relationships between different markets, products and business practices.”
Both the Justice Department and the states have been beefing up their legal teams. Some state attorneys general have said publicly they need close cooperation with the Justice Department in order to take on Google successfully.
But I should note that such talk is cheap.
The attention of American regulators has not been limited to alleged anti-competitive behavior by Google alone. As the WSJ notes:
In addition to probes by the states and Justice Department, the Federal Trade Commission is examining certain practices at Facebook Inc., including whether it acquired potential rivals such as Instagram and WhatsApp to head off competition. The House Judiciary Committee is looking at Facebook, Google, Apple Inc. and Amazon.com Inc. for possible anticompetitive practices.
There are signs of a partisan divide emerging as to how to pursue the Google probes, with the WSJ noting:
It is possible partisan divisions could re-emerge in the Google investigation. When it comes to large tech companies, some Democrats are privately skeptical that a Republican-led administration will take what Democrats view as sufficient action to curb perceived abuses of market power.
Fueling that sentiment is the outcome of two recent federal investigations of Facebook and Google’s YouTube. Officials on the Federal Trade Commission split along party lines about whether settlements with the firms were tough enough, with Republicans casting the settlements as historic victories and Democrats calling them weak.
Where is the Google investigation going? I’m not sure. But I point out that while the Journal notes “some Democrats are privately skeptical that a Republican-led administration will take what Democrats view as sufficient action to curb perceived abuses of market power” – we didn’t see the DoJ, when led by either by AG Eric Holder or AG Loretta Lynch taking an aggressive stance regarding antitrust enforcement against any of these Big Tech firms, either.
The reality is, both parties have colluded in letting the situation get as far out of control as it has – so that Amazon, Apple, Facebook, and Google have been able to achieve such overwhelming market dominance, so that each can squelch inconvenient competition.
India’s Competition Probe
On a related note, I would like to reiterate that when we look aboard, we do find regulators taking a more critical stance towards the possible anti-competitive practices of local subsidiaries of American technology behemoths. Take India as an example. Earlier this month, Jeff Bezos visited India.
Things did not go well, And despite a request, he was unable to meet with prime minister Narendra Modi, or any of his ministers. And that was not the only problem. As I wrote in Jeff Bezos’ Not So Excellent Indian Adventure: Modi Government Disses Inept Amazon.
The day before he arrived, the Competition Commission of India initiated an investigation into Amazon, for alleged violations of competition law, as reported by livemint in Amazon, Flipkart to be probed for abuse of competition law
The Competition Commission of India (CCI) on Monday ordered a probe into alleged competition law violations by Amazon and Walmart-owned Flipkart over allegations that the e-commerce majors promoted and gave discounts to “preferred” sellers, entered into exclusive partnerships with smartphone brands and abused their dominant position.
CCI noted four alleged practices on both the marketplaces—exclusive launch of mobile phones, preferred sellers on the platforms, deep discounting and preferential promotion of private labels.
The antitrust body said such exclusive arrangements between smartphone or mobile phone brands and e-commerce platforms or select companies selling exclusively on either of the platforms merit an investigation.
“It needs to be investigated whether the alleged exclusive arrangements, deep-discounting and preferential listing by the OPs (opposite parties) are being used as an exclusionary tactic to foreclose competition and are resulting in an appreciable adverse effect on competition contravening the provisions of Section 3 (1) read with Section 3(4) of the Act,” the CCI order stated.
The Bottom Line
Whether the Trump DoJ can be bothered to enforce US antirust laws vigorously remains to be seen. If it chooses to “cooperate” more closely with state probes that are not going anywhere, that’s not exactly news, either. It’s been quite some time before the US was truly serious about antitrust enforcement. That’s a bipartisan failing, and not just something that can be pinned on Republicans.