A multistate investigation of Facebook for possible antitrust violations is underway. New York Attorney General Letitia James announced the news Friday. James will be joined by the attorney generals of Colorado, Iowa,Florida, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia.
The investigation kicks off a bipartisan movement of independent state inquiries that target the social media giant, as well as Google’s parent company, Alphabet.
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According to the Washington Post, the inquiry is focused on:
“Facebook’s dominance in the industry and the potential anti-competitive conduct stemming from that dominance.”
“Even the largest social media platform in the world must follow the law and respect consumers. I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk. We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising.”1
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As previously reported by The Post, more than half of the nation’s attorneys general were readying a Google investigation. The announcement is expected Monday in Washington, but it was not clear if other tech giants like Amazon and Facebook would find themselves in the investigation’s crosshairs. The Wall Street Journal was the first to report that Facebook would also be subject to an investigation that could eventually expand to include other companies.
In an emailed statement to The Post, Google spokesman Jose Castaneda said:
“Google’s services help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country. We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector.”1
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Regulators across the nation have expressed growing concerns about the magnitude of Silicon Valley’s power in recent months. They are questioning the industry’s deep pockets and access to vast amounts of proprietary data. This unfair advantage enables companies to swallow up rivals and maintain their dominance, much to the detriment of consumers.
Two federal antitrust agencies have initiated probes targeting the industry broadly. Meanwhile, lawmakers in Congress have questioned executives from Apple, Amazon, Google and Facebook about the business practices. However, it remains to be seen whether the investigations will stick to the world’s most powerful companies. (Amazon founder Jeff Bezos owns The Washington Post.)
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Dan Ives, an analyst with Wedbush Securities, wrote in a note to investors Friday:
“We believe that a broad movement to break up companies solely because they are large will fail without a change to existing antitrust laws. The “too big, must be broken up” argument is a more difficult one to make in our opinion as current antitrust law does not provide for a forced breakup solely due to the size of the business; if it did, Walmart would have been broken up decades ago.”1
Google and Facebook did not immediately respond to requests for comment from The Post.
In July, Facebook paid a $5 billion fine and agreed to submit to significant federal oversight of its business practices to settle Federal Trade Commission allegations that the company had repeatedly lied to its users about how and who was could access their personal information. The fine was the largest in history for a privacy violation.
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The states’ growing interest in Google comes about six years after the U.S. government conducted a formal study of the tech giant’s search-and-advertising business. At the time, they opted against hitting the company with significant penalties.
Interestingly, the lack of action in the United States stood in stark contrast with Europe. Soon after the study, European nations announced a series of harsh, multibillion-dollar fines against the company for the way it manages its Android smartphone operating system and displays search results.
This is a developing story, we will update you as we learn more.
