FTC ramping up Big Tech antitrust investigations
The Federal Trade Commission says it has shifted into a higher gear in its antitrust investigations of Big Tech, marking a new phase of scrutiny for large platform companies in Washington.
In recent weeks, a small team of FTC investigators has begun zeroing in on specific types of business conduct and possible harms, said Bruce Hoffman, director of the agency’s bureau of competition — a prelude to potential enforcement actions.
“The tech task force’s focus has turned primarily to actual investigations, rather than what you might think of as ‘lead generation,'” Hoffman told CNN Business in an interview, “though we are always looking for leads.”
Earlier this week, another senior FTC official said it is his “highest priority” to come up with new guidelines for how the country’s antitrust laws apply to tech giants, along with separate policy updates looking at mergers, particularly those involving the tech industry.
The forthcoming antitrust guidance “is an enforcement document,” said Bilal Sayyed, director of the FTC’s Office of Policy Planning, at a conference in Washington, DC, on Tuesday. “It is intended to support the immediate and long-term enforcement efforts of the commission.”
The agency’s activities are being hastened by increasing public scrutiny of allegedly anti-competitive behavior by tech giants, antitrust experts and former FTC officials say.
“There’s a lot of political pressure that’s sort of forcing their hands,” said David Balto, a former policy director at the FTC’s competition bureau.
But, he cautioned, investigations take time, and may not always lead to a lawsuit. In an investigation, officials are empowered to interview companies, issue civil investigative demands — “CIDs” for short, or mandatory requests for financial documents, emails and other records — and analyze economic evidence to determine if a company has harmed competition or consumers.
“The commission probably opens 15 to 20 investigations a year on anti-competitive conduct and brings one to two cases,” Balto said.
Agency officials narrowed their focus after spending months trying to gain a better grasp of the tech sector. This spring, Gail Levine and Patricia Galvan, two officials spearheading the FTC’s tech task force, traveled to California to speak with a number of companies based in the Bay Area, Hoffman said.
The meetings helped the task force build background knowledge, but also pointed the FTC toward areas of inquiry it hadn’t considered, he added. The meetings resulted in the agency collecting a “large contact list and a number of ideas” to probe further, said Hoffman.
Experts say the FTC’s current phase is still likely focused on determining whether the law has been violated, rather than on building cases against a company.
“The only difference is they’re now issuing CIDs and they’re trying to articulate the theories everyone pretty much understood they were thinking about in the lead generation phase,” said Joel Mitnick, a former FTC trial lawyer and an antitrust attorney at Cadwalader, Wickersham and Taft. “We just don’t know how extensive that is.”
He added: “I’m actually a little disappointed the task force hasn’t been issuing more statements and transparency.”
In July, Facebook disclosed in an investor filing that it is under FTC investigation. But the task force’s scope isn’t necessarily limited to the social media giant. FTC officials have also interviewed Amazon’s third-party sellers, Bloomberg reported on Wednesday, over concerns the e-commerce titan may be abusing its relationship with those partners.
The FTC declined to comment on the Bloomberg report, and Amazon didn’t respond to a request for comment.
The agency’s more focused questioning comes as state law enforcement have spun up their own broad investigations of the tech industry. On Monday, a group of attorneys general from 48 states, Puerto Rico and the District of Columbia announced a formal antitrust investigation of Google. Another group of nine attorneys general said last week they are investigating Facebook.
Meanwhile, the Justice Department has sent a civil investigative demand to Google seeking information on its prior dealings with antitrust regulators, the search giant said last week.
The movements by state and international regulators create incentives for the DOJ and FTC to show they can keep pace, said Mitnick.
“There is a tremendous amount of political and social pressure at this point for each of these agencies not to be left behind,” he said, “because all the peer agencies inside and outside the US seem to be barreling along into Big Tech investigations.”