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Saturday, June 1, 2019

Justice Department Is Preparing ANTITRUST Investigation of GOOGLE

Probe would closely examine Google’s practices related to search, other businesses

The Justice Department is preparing to closely examine Google’s practices in search and other businesses. PHOTO: CHARLES PLATIAU/REUTERS

Brent Kendall and John D. McKinnon
Updated May 31, 2019 11:39 p.m. ET

WASHINGTON—The Justice Department is gearing up for an antitrust investigation of Alphabet Inc.’s Google, a move that could present a major new layer of regulatory scrutiny for the search giant, according to people familiar with the matter.

The department’s antitrust division in recent weeks has been laying the groundwork for the probe, the people said. The Federal Trade Commission, which shares antitrust authority with the department, previously conducted a broad investigation of Google but closed it in 2013 without taking action, though Google made some voluntary changes to certain business practices.

The FTC and the department have been in talks recently on who would oversee any new antitrust investigation of a leading U.S. tech giant, and the commission agreed to give the Justice Department jurisdiction over Google, the people said.

With turf now settled, the department is preparing to closely examine Google’s business practices related to its search and other businesses, the people said.

It couldn’t immediately be learned whether Google has been contacted by the department. Third-party critics of the search giant, however, already have been in contact with Justice Department officials, some of the people familiar with the matter said.

A Justice Department spokesman declined to comment, as did an FTC spokeswoman. Google didn’t immediately respond to requests for comment.

A Justice Department investigation would put Google—and potentially other tech giants—in an unwanted spotlight at a time when major internet companies already have seen their political fortunes turning, both in the U.S. and overseas.

The shift has come with multibillion-dollar antitrust fines for Google from the European Union. Facebook Inc. has come under intense fire over Russian use of its platform to meddle in the 2016 election. Policy makers also are increasingly skeptical of internet companies’ privacy practices, as well as their potential to create other public harm.

Alphabet, Google’s parent, typically is ranked among the world’s five largest firms by market capitalization, nourished by its powerful position in online advertising, a lucrative market that threatens to eclipse other forms of advertising. Along with Facebook, it has become a major player in the complex market. But other firms—notably Inc. —also have begun to compete for the business, raising competitive concerns for Google.

Increasingly, U.S. leaders have begun to question the size and dominance of some of the tech giants.

Democratic presidential candidate Elizabeth Warren, a senator from Massachusetts, called for the breakup of the nation’s top tech companies earlier this year, sending tremors through the large field of contenders for the party’s nomination and winning praise from populist liberal activists—as well as from Steve Bannon, a former strategist for President Trump.

Others candidates, like Sen. Amy Klobuchar (D., Minn.), a leading Democrat on antitrust issues, haven’t gone that far, but they have called for more scrutiny of big tech.

A recent letter from Sens. Klobuchar and Marsha Blackburn (R., Tenn.) urged the FTC to “take action” in response to antitrust and privacy concerns around companies such as Google and Facebook, noting the companies’ large market shares in internet markets such as search and advertising.

Some Republicans also have linked the companies’ size and influence to alleged stifling of conservative speech online—a charge the companies deny.

“If we have tech companies using the power of monopoly to censor political speech I think that raises real antitrust issues,” Texas GOP Sen. Ted Cruz said in an April hearing.

But Google would be a daunting foe for U.S. antitrust enforcers. Despite growing public concern about dominance by a few Silicon Valley giants, Google’s products remain highly popular with consumers, and the company has spent years developing a support network in Washington and around the country. It has been a funder of dozens of nonprofit groups active on antitrust issues across the political spectrum, including the American Antitrust Institute as well as several conservative think tanks.

The FTC created high expectations in its earlier Google investigation, but the company emerged largely unscathed. Some FTC staffers raised a variety of concerns internally about Google practices they believed to be anticompetitive, but they also said Google had strong procompetitive justifications for its actions and was focused on delivering services consumers liked.

The “evidence paints a complex portrait of a company working toward an overall goal of maintaining its market share by providing the best user experience, while simultaneously engaging in tactics that resulted in harm to many vertical competitors, and likely helped to entrench Google’s monopoly power over search and search advertising,” one 2012 FTC staff memo said.

The rise of big tech has seen three corporate titans that didn’t exist 30 years ago—Amazon, Google, and Facebook—suddenly amassing the power to sway large parts of the U.S. economy and society, from the stock market to political discourse, from personal shopping habits to how small businesses sell their wares.

With their enormous size and dominance have come network advantages, data caches and economies of scale that can make it challenging for new rivals to succeed. Many firms that compete with those giants in one sector also depend on their platforms to reach customers, and they complain of being unfairly squeezed.

Supporters of the big tech companies say there is so much dynamism in the sector that the giants are sure to be knocked off soon. However, their power and reach keep growing.

Antitrust leaders at the Justice Department and the FTC have publicly acknowledged the competition concerns and said those issues merit close attention.

Justice Department antitrust chief Makan Delrahim has said there is nothing wrong with a large tech firm winning its dominance through innovation, but he has said companies must compete fairly to achieve and maintain their position.

“Antitrust enforcers may need to take a close look to see whether competition is suffering and consumers are losing out on new innovations as a result of misdeeds by a monopoly incumbent,” Mr. Delrahim said last year in a speech about digital platforms at the University of Chicago.

U.S. Attorney General William Barr, Mr. Delrahim’s boss, voiced similar sentiments during his confirmation hearings in January.

“I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers,” Mr. Barr told senators. “You can win that place in the marketplace without violating the antitrust laws, but I want to find out more about that dynamic.”


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