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Questions Surround State AG Antitrust Announcements

· September 6, 2019

As the antitrust bar gathers next week in Washington for several annual competition law events, the Wall Street Journal and Washington Post report that a number of state attorneys general (AGs) are preparing to announce an antitrust investigation of Google at a Monday event outside the U.S. Supreme Court.  At the same time, other states today announced a separate Facebook investigation, probing competition issues related to privacy and consumer data. Many details of the investigations are unclear, leaving questions as to whether the cases are motivated by policy or politics.

Facebook recently came to what the FTC called a “history-making” settlement with the Commission on privacy and consumer data matters.   A number of states already conducted investigations into the issues underlying the 2011 FTC case against Google.  In parallel with the FTC’s decision to close its investigation into Google, California, Mississippi, New York, North Carolina, Ohio, Oklahoma, Texas, and Utah all shut down similar investigations  [1] [2] [3], without findings of antitrust violation or consumer harm.  Are the current state investigations re-tilling the same earth, or has something changed?  As previously covered on DisCo, the biggest change in recent years has been the increase of competition, with the smartphone revolution, an explosion of apps, and the rise of voice-based assistants, VR, and messaging platforms.  This leaves the question of whether there are specific concerns, or are these merely fishing expeditions?  

Another related open question is what theory of harm animates the investigations.  In July, Iowa AG Tom Miller, who had a leading role in states’ antitrust action against Microsoft in the 1990s, told Bloomberg Law that “[w]e are struggling with the law and the theory.”  Observers may inquire what has changed that AGs now (presumably) have a clear legal theory of harm to consumer welfare upon which to rest a competition case.

Even the subject matter of the investigations is unclear.  It’s widely understood that antitrust enforcement must focus on specific conduct.  A far-ranging investigation without theories of harm may become a fishing expedition, or worse, a pretext for using antitrust to advance political aims. Indeed, when state AGs previously met with DOJ regarding tech companies, the widely discredited concerns about “anti-conservative bias” quickly emerged as a key focal point.  

Finally, the public announcements at this stage are themselves unusual, and could be interpreted as further evidence of politicization.  State antitrust investigations are typically not announced with fanfare, and even less frequently by a coordinated group of state AGs. As we watch the AGs announce an investigation on the Supreme Court steps, we should ask: Does the previewing of non-public inquiries herald a new normal, or is it a sign of political motivation?  As noted above, allegations of so-called anti-conservative bias might motivate some AGs. The Texas AG, for example, has voiced concerns about online bias against conservative viewpoints.  Will states jump into these partisan waters with their announcement next week?   Observers will have to wait until further light is shed on these questions.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.