State probes of Google, Facebook to test century-old antitrust laws

Nearly every state attorney general announced this past week that they will investigate Google and Facebook for potential antitrust violations, alleging the Silicon Valley giants have amassed too much power and taken advantage of consumers and competitors along the way.

But the probes are on a collision course with antitrust statutes written about a century before the internet existed, raising questions about whether some antitrust laws are malleable enough to take on the powerful digital marketplace.

{mosads}The slew of recently announced investigations into Big Tech at the state and federal levels have put a renewed focus on the country’s antitrust statutes and how they’ve been interpreted in the courts.

“At a high level, I think the law is flexible enough to allow for a successful case to be brought against Google and Facebook,” John Newman, a former Justice Department antitrust attorney who’s now an assistant professor of law at the University of Memphis, told The Hill. “That said, there are going to be some hurdles that the law has erected.”

At a widely publicized press conference on Monday, 50 attorneys general stood in front of the Supreme Court in Washington, D.C., to announce their investigation into Google’s advertising business for potentially anti-competitive conduct. 

The attorneys general, hailing from a broad range of ideological backgrounds, have offered scathing criticisms of Google’s market power.

“My fellow attorneys general and I launched this investigation because Google’s enormous economic power, fueled by advertising, gives it unprecedented influence over Americans’ lives,” Texas Attorney General Ken Paxton (R) wrote in a Wall Street Journal opinion piece on Friday. “Information is power, and Americans are beginning to realize how much power Google has over them.”

{mossecondads}California and Alabama are the only states that did not join the lawsuit.

New York Attorney General Letitia James (D) previously announced that a bipartisan coalition of eight attorneys general is investigating Facebook for possible antitrust violations.

“We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising,” James said in a statement.

The effort by the state attorneys general is the latest headache for the world’s most powerful tech corporations in the past month. The Department of Justice (DOJ) and Federal Trade Commission (FTC) separately revealed they are investigating Big Tech over antitrust concerns.

Google and Facebook have maintained they are not violating antitrust laws and will cooperate with investigators.

Meanwhile, the House Judiciary Committee has launched its own bipartisan probe into competition in the digital marketplace. On Friday, the panel issued extensive document requests to Amazon, Apple, Google and Facebook seeking internal documents and communications that could help the committee establish whether the companies intended to quash competition throughout their years of fast-paced growth.

Experts warn it can be complicated to apply antitrust laws to companies such as Google and Facebook, which offer their services to consumers for free. Traditional antitrust cases have revolved around evidence that firms are using their dominant market position to raise prices for customers.

When it comes to Google and Facebook, the process is more opaque — the companies offer their services for free, but in exchange, they gather reams of data from users to use for their advertising businesses.

Maurice Eitel Stucke, a former DOJ prosecutor who’s now a professor of antitrust law at the University of Tennessee, said the attorneys general may have to prove Google’s dominant market position harms privacy protections even if it does not raise prices.

He said they could find that “rather than elevating price above competitive levels, [Google] degrades privacy protection below competitive levels.”

Antitrust cases often require the plaintiffs to prove consumers have been harmed in a tangible way, a high bar for companies such as Google and Facebook, where harms can include intangibles such as privacy violations or excessive surveillance.

“You would have to show … that their practices cause people to have to surrender more of their data than they would in a competitive market or look at more advertisements than they would in a competitive market,” Newman said.

The lawmaker heading the House Judiciary Committee probe into digital markets, Rep. David Cicilline (D-R.I.), has made clear that the investigation could result in legislative proposals to modernize antitrust laws in order to overcome some of those obstacles.

“One of the things we’re looking at during the investigation is whether or not we need to update our modernize our statutes because … those statutes were written 100 years ago in response to the railroad and oil monopolies,” Cicilline told reporters on Capitol Hill this past week. “It’s a very different economy today.”

There is more appetite for changing antitrust laws in the Democratic-controlled House than in the GOP-led Senate. The biggest tech critics on Capitol Hill are split over whether it’s necessary to change antitrust law to take on Silicon Valley or if the key is to push the federal agencies and states to aggressively interpret the law.

“Existing laws have been shown to work with Big Tech,” Sen. Richard Blumenthal (D-Conn.), a former state attorney general who helped bring a landmark antitrust case against Microsoft in the 1990s, told reporters this past week.

Sen. Brian Schatz (D-Hawaii) said he is “open to” changing antitrust law, which mainly revolves around the Clayton Act of 1914 and the Sherman Act of 1890.

“I think we need a more modern interpretation of existing law,” he told The Hill, noting the courts and DOJ could choose to pursue a “more vigorous enforcement of antitrust law.”

Over the past 40 years, federal courts have shifted away from a stringent enforcement of antitrust law, functioning largely under a theory of the law that assumes “big is not necessarily bad.” Several Supreme Court decisions have made it more difficult to bring antitrust cases, which advocates have argued puts the onus on Congress to take action.

“There have been a number of precedents in antitrust law in the past 40 years that I think are making it a lot harder to bring cases that the agencies and state AGs and private plaintiffs even should have an easier time of bringing,” Charlotte Slaiman, an antitrust attorney with the advocacy group Public Knowledge, told The Hill.

There is little movement to change antitrust laws in the Senate, but there is widespread support for the probes by state attorneys general.

Sen. Mark Warner (Va.), the top Democrat on the Senate Intelligence Committee, told The Hill he spent time over August recess meeting with experts about whether antitrust law is sufficient to take on the country’s most powerful tech companies.

“I walked away with the sense that actually the power is there in the law, but you have to have a theory of antitrust that goes beyond lowest price only,” Warner said. “Part of the thing with the Facebooks and Googles of the world — the premise that they’re free services — there’s nothing free about their services. They are giant sucking sounds of information and data being taken from all of us that’s in a sense traded for their ability to market that to advertisers.”

“So I do think there is appropriate teeth in the law,” he said.

In the House, Rep. Matt Gaetz (R-Fla.), a member of the Judiciary antitrust subcommittee, said he’s been having conversations with the state attorneys general involved in the Google and Facebook antitrust probes and has faith they have the proper tools at their disposal. 

“In my discussions with state attorneys general — and I’ve had many since that announcement — they are confident that our existing antitrust laws are being violated by many of these technology platforms,” Gaetz said.

He added that he recently met with Attorney General William Barr to discuss the DOJ’s Big Tech probe, which he described as a serious endeavor. 

The DOJ and FTC will mainly use federal antitrust statutes during their investigations. But the states have more options. The coalition of attorneys general will use state antitrust laws, which mainly track with federal statutes, as well as laws around deceptive or unfair trade practices.

“You can see the states have even more tools in their toolbox,” Stucke said, predicting the states could argue “the data-opolies were being deceptive in how they collected their data.”

So far, the DOJ, FTC, House and state attorneys general investigations are moving on separate tracks. But regulators, states and lawmakers will likely work more closely together as the probes move forward.

Sen. Josh Hawley (R-Mo.), who launched the country’s first investigation into Google during his time as Missouri’s attorney general, called the multistate probe “tremendous.”

“It shows [the concern about tech] is bipartisan — it sweeps across the country — and that these law enforcement leaders understand that there are real consumer welfare issues at stake here,” Hawley said. “And I hope it will be a wake-up call to the people in this building to do something on tech.”