Sep 9, 2019

Facebook and Google slated to face more antitrust probes

Photos: Denis Charlet/AFP/ Daniel Reinhardt/picture alliance via Getty Images

State attorneys general are expected to formally launch antitrust investigations this week into Facebook and Alphabet’s Google.

Background: These are separate from ongoing investigations by the Justice Department and the FTC, which have been looking into the 2 mega companies since last year, plus ongoing inquiries from the FBI and SEC.

Details: The new investigations, which involve 2 large bipartisan coalitions that may include more than 40 attorneys general, is being led by Texas Attorney General Ken Paxton, according to WSJ.

  • Separately, New York Attorney General Letitia James is organizing an additional bipartisan, multistate antitrust probe into whether Facebook “has stifled competition and put users at risk,” she said in a statement last week.

Why it matters: While Google's stock has underperformed the broader stock market this year, gaining around 13% compared to the S&P 500's 18% rise, Facebook has managed to nearly double the market's return, up around 35% as it has continued to unroll solid earnings in spite of the mounting controversies.

Yes, but: Since July 2018, when early investigations into Facebook's involvement with the Cambridge Analytica scandal took off, the stock is down almost 3% compared to gains of around 9% for both Alphabet and the S&P.

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NY attorney general talks Facebook with DOJ

New York State Attorney General Letitia James. Photo: Drew Angerer/Getty Images

New York Attorney General Letitia James, a Democrat, heads to Washington Monday to discuss the state-level antitrust investigation of Facebook she's leading with top Justice Department officials, according to a person familiar with her plans.

Why it matters: The meeting could be a precursor to the DOJ joining the Facebook investigation, which is led by New York and includes 7 other state attorneys general, plus D.C.

The big picture: James has been at the forefront of lawsuits challenging the Trump administration over immigration, environmental rollbacks and other policies, and she is also at odds with the Justice Department over the T-Mobile-Sprint merger. If she and Trump's DOJ can find common cause investigating Big Tech's power, that would be one more sign of the issue's bipartisan appeal.

Details: James is expected to meet with Attorney General William Barr, Deputy Attorney General Jeffrey Rosen and Associate Attorney General for antitrust Makan Delrahim, the person familiar with the plans said. A bipartisan group of state attorneys general is also expected to join the meeting, the person said.

  • Iowa Attorney General Tom Miller and Nebraska Attorney General Doug Peterson were part of the group of state officials in Washington for the meeting, according to their offices.
  • States investigating Google for anticompetitive practices —  including Texas and New York — sent representatives to meet with top DOJ officials in July to discuss tech antitrust issues. 
  • The Justice Department and FTC split jurisdiction over major tech companies for competition concerns earlier this year, with the FTC taking up an antitrust investigation into Facebook. But, as Bloomberg reported, Barr prodded his agency to begin its own Facebook inquiry, prompting concerns from both FTC chairman Joe Simons and Republican Sen. Mike Lee about overlapping investigations.
  • The state attorneys general also discussed the Facebook investigation at the FTC today, according to a spokesperson for the New York AG’s office.
  • The states met with FTC chairman Joe Simons, some of the commissioners, and staff from the Bureau of Competition, an FTC spokesperson said.

What they're saying: “We have grave concerns over potential anticompetitive practices by large tech companies," James said in a statement. "We are concerned that Facebook’s actions may have put consumer data at risk of data breaches, reduced the quality of consumers’ choices, and increased the price of advertising, so we will continue to work in a bipartisan manner to protect consumers and protect competition.”

  • A Justice Department spokesperson declined comment.

The bottom line: Pressure on Facebook and other tech companies is building from state capitals to Washington, where lawmakers and regulators are conducting their own investigations into the power of tech.

  • A move by the states and DOJ to join forces would mirror the antitrust investigation of Microsoft in the '90s, in which the Justice Department and several state attorneys general together sued the company.

Editor's note: This story has been updated with comment from James and details about the state attorneys general meeting with the FTC.

The growing list of U.S. government inquiries into Big Tech

Illustration: Sarah Grillo/Axios

Monday, a large group of state attorneys general led by Texas's Ken Paxton is expected to announced a new antitrust probe into Google, adding to the lengthening list of investigations into the big internet companies.

Why it matters: Big tech companies like Google, Facebook, and Amazon are now facing numerous state and federal probes into their practices. These companies have historically enjoyed wide regulatory freedom in the U.S., but lawmakers and regulators want to change that — and antitrust law gives government its most powerful tools to penalize, regulate or even break up American corporations.

Catch upArrowSep 9, 2019

50 states and territories open joint antitrust investigation into Google

The Google logo on display in Berlin, Germany. Photo: Michele Tantussi/Getty Images

Attorneys general of 50 states and territories on Monday formally announced a joint, bipartisan antitrust investigation into Google, the Washington Post reports.

Why it matters: The move by the states and territories represents a new, wide-ranging front in the government-led assault on Google's power. It also means that even if parallel probes by the Department of Justice and Congress fizzle out, some even more aggressive state prosecutors could carry on the fight.

Go deeperArrowSep 9, 2019