U.S. states launch antitrust probe of big tech; Google ads in focus

FILE PHOTO: A Google sign is seen during the WAIC (World Artificial Intelligence Conference) in Shanghai
FILE PHOTO: A Google sign is seen during the WAIC (World Artificial Intelligence Conference) in Shanghai, China, September 17, 2018. REUTERS/Aly Song/File Photo

September 9, 2019

WASHINGTON (Reuters) – Attorneys general from 48 U.S. states, the District of Columbia and Puerto Rico have opened an antitrust probe into big tech companies that focuses on Alphabet’s Google <GOOGL.O>, Texas Attorney General Ken Paxton formally announced on Monday.

Paxton leads the probe, he said, which will focus on Google’s advertising business.

The Big Tech giants that were once praised as engines of economic growth with massive efficiencies have increasingly come under fire for allegedly misusing their clout in the market and lapses such as privacy breaches.

U.S. President Donald Trump has called for closer scrutiny of social media firms and Google, accusing them of suppressing conservative voices online without presenting any evidence.

Google specifically has faced accusations that its web search service, which has become so dominant that it is now a verb, leads consumers to its own products at the cost of competitors. There have also been complaints of potentially anti-competitive behavior in how it runs the advertising side of its business.

Google said in a statement on Friday that it had not yet been contacted by state antitrust enforcers but would work constructively with them.

Separately, a second group of state attorneys general, led by New York, is focusing on Facebook Inc <FB.O>, it was announced on Friday.

The social media platform, which owns one-time rivals Instagram and WhatsApp and has more than 1.5 billion daily users, has been criticized for allowing misleading posts and so-called “fake news” on its service. Will Castleberry, Facebook’s vice president for state and local policy, said last week that the company would cooperate with state attorneys general.

One criticism of Facebook is that it has been slow to clamp down on hate speech, and it recently paid a $5 billion settlement for sharing 87 million users’ data with the now-defunct British political consulting firm Cambridge Analytica. The consultancy’s clients included Trump’s 2016 election campaign.

On the federal level, the Justice Department and Federal Trade Commission are probing Facebook, Google, Apple <AAPL.O> and Amazon <AMZN.O>, also for potential violations of antitrust law.

Google’s parent Alphabet said on Friday the Department of Justice in late August requested information and documents related to prior antitrust probes of the company. The company added in a securities filing that it expects similar investigative demands from state attorneys general, and that it is cooperating with regulators.

Amazon, the world’s biggest online retailer, has been accused of unfair tactics with third-party sellers on its website, who must pay for advertising to compete against first-party and private label sales by Amazon itself.

Apple has come under fire from app developers over practices like making only iPhone apps available through its official App Store. The music-streaming app Spotify <SPOT.N> has alleged that App Store policies make it difficult to compete against Apple Music for paid subscribers.

State attorneys general have fewer resources than the federal agencies but have been known to team up to take on even giant corporations.

Most recently, 43 states and Puerto Rico sued Teva Pharmaceutical Industries Ltd <TEVA.O> and 19 other drugmakers in May, accusing them of scheming to inflate prices and reduce competition for more than 100 generic drugs.

(Reporting by Diane Bartz; Editing by Nick Zieminski)

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