DoJ launches anti-competition investigation into leading online platforms

The US Department of Justice announced on Tuesday it is investigating if leading online platforms have undertaken anti-competition, anti-innovation, and other consumer harming practices.

Though the DoJ does not name the companies it will focus the investigation on, when it specifies “concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online”, it would be fair to assume the targets are Google, Facebook, Twitter, Amazon, and when it comes to digital content distribution, Apple.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Makan Delrahim, the Assistant Attorney General of the Department’s Antitrust Division. “The Department’s antitrust review will explore these important issues.”

The DoJ is seeking “information from the public, including industry participants who have direct insight into competition in online”. If found guilty, and this may including offences other than anti-competition, according to The Wall Street Journal sources, “the Department will proceed appropriately to seek redress.”

This is the latest of a series of actions taken by the US legislature and administrative authorities to rein in the power of the online platforms. In March the House Antitrust Subcommittee launched a probe into online market competition.

“The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today. Market power in digital markets presents a whole new set of dangers,” House Representative David N. Cicilline, Chairman of the Antitrust Subcommittee said at the time.

More recently companies including Google, Facebook, and Amazon have been subjected to House Judiciary Committee enquiry into their practices related to market competition, amid reports that these companies have gained shares in their key markets. Facebook is on the eve of a settlement with the Federal Trade Commission that could run as high as $5 billion following the investigation of its privacy breach.

The most common measure used by the leading online companies to fend off competition is to buy the competition out. The most high-profile cases include Facebook’s acquisition of WhatsApp and Instagram, Google’s acquisition of Waze, Amazon’s acquisition of Twitch, and Apple’s acquisition of Shazam. In some cases, for example the acrimony between Spotify and Apple, some restrictive policy changes may be applied to limit the growth of a competition, especially if the competition relies on the platform. Tim Cook, CEO of Apple, however denied the company is a monopoly in a CBS interview in June, claiming Apple is not in a dominant position in any market.

The power wielded by the online platforms has not escaped the attention of the politicians, especially the presidential candidates. President Trump has repeatedly lambasted the alleged bias against conservatives by the social media giants, while Elizabeth Warren, one of the front-runner Democrat candidates, famously called for the breakup of the big internet companies. However the applicability of such proposed breakups is debatable. The most high-profile attempt to break up a company in recent history was the one targeted at Microsoft, a decision that was later rescinded on appeal. Even if a breakup does happen, its long-term effectiveness may also be questioned. The last memorable breakup of a monopoly in the last 40 years was the geographical split of AT&T’s regional operations into seven Baby Bells. Four of them were later acquired by the current AT&T.