Tech Giants in Antitrust Crosshairs

As Senator Corey Booker said on ABC's This Week, If I'm President nine states, I love a Justice Department that uses antitrust legislation to do the proper investigations in the whole industries accountable for corporate consolidation. Google and Amazon maybe

the first two in for some antitrust scrutiny. The federal agencies that handle antitrust matters, the FTC and the Justice Department, are divvying up oversight of the two companies, with the Justice Department taking Google and the Federal Trade Committe taking Amazon. Joining me is Jennifer Reid, Bloomberg Intelligence Senior litigation analyst jen have the FTC and Justice departments split up oversight in this way before. Oh yes, Now the thing is

the FTC and d J share ant trust enforcement. So no matter what it is, whether it's an investigation into conduct of a company like this or whether it's reviewing a potentially anti competitive merger, they always clear these matters with each other. They talk to each other and say, Okay, which one has the expertise in this area, which one has the interest in taking this on, and they decide which will review the merger, which will investigate the conduct,

et cetera. Do we know what in particular they're looking at here? You know, we don't, and it's way too early to say, and it actually could be that they're looking at a number of things. Oftentimes, the way an anti drust investigation starts is that consumers or competitors or third parties in an industry come in and they wage

complaints about conduct of some business. And I imagine that there have been a lot of complaints over the years against some of these big tech companies, and then the Fed Trade Commission or Department of Justice we'll look at that and think, well, the kind of conduct this entity is talking about isn't really antitrust conduct. We won't investigate this.

But if enough complaints come in talking about conduct that sounds like maybe it could violate the antitrust laws, cross the line into anti competitive behavior rather than just aggressive competition, then they may decide, Okay, it's time to open up an investigation. And sometimes they may be looking at that exact conduct, they might be looking at a variety of conducts. You know, we just don't know, and it's not something that we're going to know actually probably for quite a

long time. So U s antitrust theory revolves around this harm chick consumers. And in this case, Amazon says prices are lower for consumers, and Google says we're not even charging consumers anything. So does the US have real antitrust concerns here? You know, it's possible. What they'll do is

they'll get economists involved in this investigation. They will gather a lot of documents, a lot of data from these companies as well as data from competitors and other third parties, and they'll start to look at that data and they'll determine whether whatever the conduct is that they're looking at, whether that conduct is excluding rivals and hampering competitions such

that it could ultimately cause consumers harm. Now, it is difficult, right because these companies do offer free products, they offer uh free services or low priced products such as Amazon. So it's going to be difficult for these enforcers to go to court and established that the antitrust laws have

been violated. But if you start to look at these things creatively, as courts and enforcers may, such as thinking about the concept of consumer data that is being collected, let's say by an entity like Facebook, as being the price we pay and rather than thinking about in dollars, which some suggest, then maybe you do find a consumer harm in the amount of data that consumers have to

give up for these free services. European regulators have been after the tech giants, and Google has been fined several times. What makes US antitrust law different or the way it's enforced different that we haven't seen those huge finds here. You know, there are a couple of really big differences. First, the US antitrust enforcers are law enforcers. That means they can't do anything. They can't penalize these companies. If they find wrongdoing, they have to take their proof to court.

They have to prove it in court, and it's up to a judge to decide whether there's been a violation and what that remedy should be. On the other hand, in the EU, the European competition enforcer can institute remedies. They don't have to necessarily go to a court in the first instance. They can come in and they can penalize the company, as the European regulators have with Google. So that that's one thing that's very important. Our law

has been court made. It's basically common law, very short statutes, the antitrust laws back in eighteen ninety that have been interpreted by the courts. The laws developed based on the courts, and the courts have to decide whether companies are violating the anti trust laws. In Europe, there's a lot more flexibility, not only within the way their statutes are craft it,

but just within what the competition regulator can do. So does this seem as it it's just a shot across the bow, or are we heading toward what Microsoft faced in the nineties a trial. We very well could be heading toward a trial that could happen. I think if it does, it's a way down the road. So it's really early now to say, it takes a long investigation and then it takes a determination by the enforcement agency reviewing that there's been a violation and we're going to

go to court. Also, these things get settled often so before they go to court. If the agency is going in that direction, it may be that the company comes up and says, hey, let's settle this, and there's something that they come up with it resolves the matter. The FTC started an investigation to Google in and then dropped it in So how likely is it that it's going to be any more aggressive or maybe there are political pressures now there weren't then. Yes, I think they're political

pressures now that there weren't. We have an entirely different FTC commissioner staff now than we did, five different commissioners than made those decisions in two thousand thirteen, and maybe different markets, maybe different conduct. You know that that's the question, what is the conduct? Google was investigated by the FTC and certain behaviors were investigated, But there may be different behaviors now having a different kind of an impact. So

it's hard to say. Now. As far as the Justice Department, we have making del Raheem in charge of the Antitrust Division. Do you know his inclinations whether that might affect what goes on. Well, the Department of Justice, according to the news reports, has taken charge of investigating Google, whereas the FTC looks like it's going to be or might be

investigating Amazon and Facebook. So the big difference there is that making del Rahem as Assistant Attorney General in charge of Anti trust is basically the decision maker with the Attorney General as to what to do, whether to actually try to go to court to sue the company in conducting the investigation, whether to settle down the road at some point, etcetera. At the FTC, it's five commissioners and they need a majority vote in order to take any action.

So if they do make a finding there's a violation, it would take a vote. If they try to settle it, it would take a majority vote to actually go to court. Thank you so much. Thank you. That's Jennifer Ree. She's a Bloomberg Intelligence Senior litigation analyst. For more of her analysis, you can go to b I go on the Bloomberg Terminal. Thanks for listening to the Bloomberg Law podcast. You can subscribe and listen to the show on Apple podcast, SoundCloud,

and on bloomberg dot com slash podcast. I'm June Brasso. This is Bloomberg