The FTC has sent top antitrust officials into the heart of Silicon Valley to seek out complaints about anti-competitive behavior, an unusual move that offers yet another hint about the government’s growing interest in policing the industry’s giants.
The weeklong tour included private meetings between leaders of the FTC’s new technology task force and more than a dozen industry players to discuss the state of their businesses and market competition challenges, an FTC official familiar with the issue told POLITICO. During that same trip, the head of the FTC’s bureau of competition made a direct plea to attendees at an antitrust conference in Palo Alto, Calif. to share any evidence of anti-competitive tech mergers, according to a copy of his remarks.
The outreach — details of which were previously unreported — comes as both the FTC and Justice Department have shown a surge of interest in taking a serious look at years of complaints about the dominant role that companies such as Google, Facebook and Amazon are playing in big slices of the economy and Americans’ everyday lives. Those include disclosures in the past week of an arrangement in which the Justice Department has claimed jurisdiction over any potential antitrust probes of Google and Apple, while the FTC would be free to do the same with Facebook and Amazon.
Neither agency has announced plans to launch an antitrust investigation, but such discussions can be the first step toward an active probe. The FTC has also spent the past year pursuing an investigation of alleged privacy violations by Facebook, which has said it expects a fine of as much as $5 billion.
The FTC’s outreach at the May 22 conference in Palo Alto, organized by the publication Global Competition Review, was one visible sign of the approach the commission is taking toward antitrust scrutiny after creating the technology task force in February. The mandate of the 17-person task force, mainly made up of FTC staff attorneys, is to investigate anti-competitive conduct and review previously approved mergers.
Bruce Hoffman, director of the FTC competition bureau, told attendees at the Palo Alto event that the agency would be “keeping our ear to the ground” to learn about mergers and other anti-competitive behavior that might not reach officials in Washington. Hoffman said he’s aware of concerns that large companies are buying potential rivals to squelch competition but he has yet to see good economic evidence of a widespread problem.
“We need your help,” Hoffman told the gathering. “Participants in these various industries might well be best situated to spot problematic acquisitions and bring them to our attention.”
Patricia Galvan, who heads the FTC task force, spoke on a panel at the same conference, and two other leaders of the unit, Gail Levine and Krisha Cerilli, were also in Silicon Valley at that time, according to current and former FTC officials familiar with the trip. They met privately with industry players over several days around the conference, said the officials, who characterized the meetings as listening sessions.
The current FTC official told POLITICO that competition enforcers rarely travel outside Washington to hear from industry participants and the task force’s participation in the Palo Alto antitrust conference offered an opportunity to take such meetings to the nation’s technology capital.
“Because small companies and investors fear retaliation or some kind of financial detriment by speaking up, it’s important for antitrust enforcers to reach out and make it easy for complainants to present their information confidentially with the protection of the government. It sounds like the FTC is enabling that type of behavior,” said Gene Kimmelman, a former DOJ official who now runs the advocacy group Public Knowledge.
Former FTC Chairman William Kovacic, a Republican, noted that the agency is undoubtedly feeling political pressure to act in the face of Washington’s increasing distaste for big technology companies.
“That task force is going to be the group that will spearhead the new cases, and you can’t imagine making a basic decision about what companies to pursue without consulting [the task force], Kovacic said.
“You’re going to be measured by what you deliver for these type of issues,” he added. “To create the task force pushes you in the direction of doing something.”
The FTC has spent years dogged by a reputation for being reluctant to offer aggressive policing of the big search, social media and online commerce companies, even as they have come to dominate ever greater shares of the U.S. and world economies.
During the Obama administration, the FTC conducted a probe of Google’s search practices but closed the matter in 2013 without taking any enforcement action, a move that drew criticism the agency had choked. The Wall Street Journal reported two years later that FTC staff had wanted to pursue an antitrust lawsuit against Google, only to have the commissioners shoot down the idea.
That left the antitrust enforcement field largely in the hands of European regulators, who have hit Google with penalties totaling nearly $10 billion. But the past year has brought signs that the FTC is increasingly interested in taking another crack at tech.
That includes the FTC’s negotiation of a possible data privacy settlement with Facebook, with a potential fine of up to $5 billion, which would be the largest in the agency’s history. That investigation was triggered by last year’s revelation that the political consulting firm Cambridge Analytica, which worked on President Donald Trump’s 2016 campaign, had improperly obtained personal information on tens of millions of Facebook users.
The FTC has also shown new assertiveness on antitrust: Last month, it won a lawsuit against semiconductor giant Qualcomm in which the FTC accused the company of engaging in anti-competitive behavior to maintain a monopoly over certain processors used in mobile phones. Qualcomm is appealing the ruling.
The tech industry’s critics have already offered ideas for how the commission should pursue its next targets, including a potential antitrust probe of Amazon.
Sen. Elizabeth Warren (D-Mass.) proposed legislation as part of her 2020 presidential campaign that would bar companies like Amazon from selling goods in a digital marketplace they control, arguing it gives them an unfair advantage over other merchants on the platform. Amazon has denied engaging is bad conduct and argues its e-commerce operation helps small businesses attract more customers.
Amazon has also rapidly expanded into other lines of business, often through acquisitions like its FTC-approved purchase of grocery chain Whole Foods in 2017. Its lucrative Amazon Web Services division is a leading provider of cloud computing services to corporations and governments alike, providing technology that ranges from data storage to facial recognition software.
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