State attorneys general are leading efforts to crack down on the power of big technology firms, as highlighted by California’s suit filed this week against Amazon and a Texas-led coalition’s measured win in its fight against Google.
The cases are just two in a long line of state-led efforts to rein in the power of tech giants that are showcasing the bipartisan angst at Big Tech and momentum on the state level to take on the industry’s most dominant companies while congressional efforts to do so are stalled.
“Whether you’re Republican or Democrat, people can see what’s going on with these big companies, Big Tech companies and the power and the levers that they exert over everyday Americans, is a little bit scary,” Texas Attorney General Ken Paxton (R) told The Hill. “I think people are realizing, the attorneys general are realizing, that if we don’t address this soon it may be too late, you may never be able to stop it.”
Nearly every state is suing Google and Meta, Facebook’s parent company, between three cases filed against the companies in the past two years.
The unified efforts help state enforcers pool their resources to give them a chance against the mammoth firms. But they’re still facing an uphill battle to take on the country’s most prosperous businesses while using a rulebook critics say is outdated to go after the new age industry titans.
“It gives them more ground troops to fight for battle,” said Bill Baer, former head of the Department of Justice Antitrust Division and former director of the Federal Trade Commission Bureau of Competition.
“It’s still very, very expensive, and the cost of hiring outside experts to come in and do economic analysis, and analysis of the technology, is enormously resource intensive and expensive,” he added. “Coordinating or banding together as a group of enforcers helps with that problem. They still are outpersoned, and don’t have the dollars that a private company — a successful private company — has at its disposal, but it does come closer to leveling the playing field.”
Colorado Attorney General Phil Weiser (D), who is leading one of the multistate cases against Google, is no stranger to the antitrust enforcement world. He served in the Department of Justice (DOJ) antitrust division under the Obama administration. But he said he didn’t necessarily plan on actively enforcing antitrust laws when he assumed his role as Colorado attorney general in 2019.
“It was more that the issues [rose in] importance,” he said. “And it was obviously not just me — states across the nation have seen … levels of concentration today that are manifestly unhealthy. And what that means is consumers are more vulnerable to being squeezed.”
The case Weiser is leading was branded as a bipartisan effort from the start. Weiser was joined by Nebraska Attorney General Doug Peterson (R), Tennessee Attorney General Herbert Slatery (R) and Iowa Attorney General Tom Miller (D) in December 2020 when they announced the case.
The lawsuit alleges Google illegally maintains monopoly power over search engines and search advertising markets through anticompetitive contracts. Google has denied the allegations.
The states further contend Google is trying to expand its alleged monopoly in the mobile market into new sectors, like the automobile industry, as search becomes integrated into more products.
“The idea is if you have a connected car and you say to your car, ‘Find me a Chinese restaurant,’ what powers that search? Google is entering into restrictive contracts with carmakers that basically mirror the restrictive contracts they’ve had in mobile,” Weiser told The Hill.
“We obviously are looking forward. The last decade things happened as they happened. There’s going to be some second guessing, ‘Could antitrust enforcers have acted sooner?’ What I would just say is, you’re always in a delicate position when you’re dealing with markets in their incipient [stage],” he added.
Google’s market power in advertising is targeted in a separate case led by Paxton. The coalition of 16 states and Puerto Rico that filed that lawsuit had a win earlier this week when a judge ruled to allow most of the case to proceed, striking down just one portion of the case that alleged collusion based on an advertising deal between Google and Facebook.
Meanwhile, e-commerce giant Amazon is emerging as the latest target for state antitrust enforcement action.
California Attorney General Rob Bonta (D) sued Amazon Wednesday, alleging the company has stifled competition and caused higher prices for consumers over anticompetitive contracts with third-party sellers.
D.C. Attorney General Karl Racine (D) made similar allegations in a case tossed out by a judge in March. Racine filed a notice of appeal last month in an attempt to revive the case.
“What we’ve seen is that they exercise massive market power on the platform to make it nearly impossible for sellers and creators of products and services to offer prices at a lower price than Amazon does because of the restrictions that Amazon mandates that sellers comply with in order to have access to their platform,” Racine told The Hill. “We think that is illegal and we are confident that at the end of the day a court will agree with us.”
Amazon denied the allegations in both the D.C. and California cases.
As for Meta, 48 attorneys general filed a lawsuit against the company in December 2020 in an attempt to unwind roughly decade-old acquisitions of WhatsApp and Instagram that the complaint alleges were an attempt to squash emerging rival apps.
Meta has denied the allegations, and noted that regulators approved the acquisitions at the time.
Issues on timing are a key factor in antitrust cases, Weiser said.
“Critics can’t have it both ways. They can’t say, ‘Oh, you’re too quick to see a monopoly everywhere. You’re bringing cases right and left based on what you think might happen.’ And then to say, which is what’s happening and Instagram and WhatsApp, ‘Oh, you’re too late,’” he said.
States have been struggling in their case against Meta. A judge ruled to dismiss the case last year, arguing the states filed the complaint too late against the 2012 and 2014 acquisitions.
State attorneys general filed a motion to appeal in January. A hearing on their appeal is scheduled for Monday.
These efforts by state enforcers — as well as those of federal regulatory agencies — to sue tech giants come as critics argue antitrust laws need to be updated to target the technology companies. For example, proposals to update the laws use language to define dominant firms in part based on the number of users, a factor that could help legislation apply to the modern-day titans operating in the digital world.
Congress has been mulling legislative action to revamp antitrust laws to better address the tech industry since the release of a wide-ranging House report in 2020 alleging Amazon, Google, Apple and Meta, then known as Facebook, stifled competition.
The report led to a series of bipartisan bills to update antitrust laws in a way that supporters say better suits the modern age. For example, Sens. Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) are lead sponsors of the American Innovation and Online Choice Act, which aims to prohibit companies from preferencing their products over rivals’, a core allegation in state complaints against companies like Google and Amazon.
But even the proposals on the issue that have advanced out of Senate and House Judiciary Committees with bipartisan support are stalled without a floor vote scheduled in either chamber ahead of fast approaching midterm elections.
“I think it’s important that Congress step up and modernize the laws and create better protections for consumers and residents and Americans,” Racine said.
“Part of the reason for being behind [other countries] is this assumption that we have in Congress where there’s just total gridlock,” he added. “And in that breach it’s incumbent on attorneys general to step up and use all the tools in the toolbox, including lawsuits and other actions, in order to ensure that residents are protected.”