DOJ antitrust chief warns Big Tech, noting Standard Oil parallelJune 11, 2019
The Justice Department’s antitrust chief offered several warnings to giant tech companies on Tuesday, as Washington continues to signal its interest in addressing Silicon Valley’s growing power.
Assistant Attorney General Makan Delrahim’s comments came on the same day that the House Judiciary Committee held its first hearing on competition in digital markets.
In a speech to an antitrust conference, Delrahim said early U.S. actions against industrial giants such as Standard Oil provide “valuable lessons for today’s antitrust enforcers.”
One important parallel is that “consumers actually enjoyed lower prices during the height of Standard Oil’s dominance,” he said according to his prepared remarks, which were released by the DOJ. This fact “demonstrates that price effects are not the sole measure of harm to competition under the U.S. antitrust laws,” Delrahim said, as he noted that there are “digital markets in which the profit-maximizing price is zero.”
Acquisitions of early-stage companies also may harm competition in a digital market, the assistant attorney general said. “I will note the potential for mischief if the purpose and effect of an acquisition is to block potential competitors, protect a monopoly or otherwise harm competition by reducing consumer choice, increasing prices, diminishing or slowing innovation or reducing quality,” he said.
In addition, Delrahim indicated he’s well aware of the privacy concerns that are swirling around tech companies such as Facebook Inc. FB, +1.88% , Alphabet Inc.’s GOOG, -0.15%GOOGL, -0.16% Google and Amazon.com Inc. AMZN, +0.16% . “Diminished quality is also a type of harm to competition. As an example, privacy can be an important dimension of quality,” he said.
“While antitrust is not a panacea for every policy challenge presented by the digital market, the Antitrust Division will not shrink from the critical work of investigating and challenging anticompetitive conduct and transactions where justified,” Delrahim said at the end of his speech, which also highlighted how there are “only one or two significant players in important digital spaces.”
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Delrahim’s remarks follow a series of reports more than a week ago that said Google, Amazon and Apple Inc. AAPL, +1.16% are under investigation by the DOJ, while the Federal Trade Commission is probing Facebook. The address came as Massachusetts Democratic Sen. Elizabeth Warren, a 2020 presidential hopeful, called for Delrahim to recuse himself from supervising any investigations of Google or Apple, given that in a past job he did lobbying work for those companies.
Meanwhile, one of the House Judiciary Committee’s subcommittees held an initial hearing on competition in digital markets, after announcing a bipartisan probe in this area last week. The hearing was titled “Online Platforms and Market Power, Part 1: The Free and Diverse Press.”
“While new technologies may upend how news and information are shared, it is vital that we maintain open and competitive markets which will best foster a robust and independent press,” said New York Democratic Rep. Jerrold Nadler, the committee’s chairman, during the hearing. “With this in mind, I welcome today’s hearing as the beginning of the committee’s investigation into competition in digital markets.”
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Height Capital Markets analysts played down the importance of Tuesday’s hearing and other Washington maneuvers.
“In the near-term, we do not expect any legislative or other action to be taken against tech companies, as we expect this to be the first of many hearings,” they wrote in a note.
In addition to facing broad antitrust questions, tech companies are dealing with greater scrutiny over how they handle their users’ data and how they deal with misinformation and political bias. Lawmakers have talked up the potential for a bipartisan law that would lead to better protections of personal data, but analysts say it’s unlikely because of a partisan split.
Facebook’s stock has gained 36% in 2019, Amazon and Apple are both higher by 24%, and Alphabet is up 4% this year, while the S&P 500 SPX, -0.03% has advanced 15%.
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