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Antitrust Investigation Of Facebook May Be The First Step Against Big Tech

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A coalition of US state officials announced Friday they had launched an antitrust investigation of Facebook to determine if the social media giant “has stifled competition and put users at risk.” This is the first of what might be a wave of action against dominant technology firms.


New York State Attorney General Letitia James announced the action on behalf of seven other states and the District of Columbia to probe “whether Facebook has stifled competition and put users at risk.”


The case may be the first in a series of antitrust actions against Big Tech firms and highlights growing “techlash”. It is based on worries about platforms which control the flow of online information and dominate key economic sectors.


“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.


Earlier this year the US Justice Department said it would launch a “review” of major online platforms to determine if they have stifled innovation or reduced competition.


It was not immediately clear if the states would be working in coordination with federal officials.


Rising fears

Facebook offered no immediate comment. However, in the past, it claimed it is not a monopoly. The company also claimed that consumers have many choices for how to connect with people online.


The new probe “shows how unease with large tech companies is spreading beyond Congress and the federal government agencies to the states”. Michael Carrier, professor of antitrust law at Rutgers University, said this. “With each passing day, there are greater fears about these companies controlling our online lives.”


Yet the legal basis for an antitrust action remains unclear, said Eric Goldman. Goldman is the director of the High Tech Law Institute at Santa Clara University. “It remains to be seen if the (attorneys general) have any merit to their complaints or if they will be conducting a fishing expedition hoping to find some damning evidence,” Goldman said.


“Companies as large as Google or Facebook probably have minor problematic practices the AGs could target, but I’m still waiting for any evidence that would support more structural challenges to the internet giants’ practices.”


Antitrust investigation not only on Facebook

They will not only carry out the antitrust investigation on Facebook. A separate coalition of states will soon launch another antitrust initiative, with Google reportedly a target.


The office of the Texas attorney general scheduled an event Monday in Washington with a “broad coalition of states” to unveil a probe into “whether large tech companies have engaged in anticompetitive behavior that stifled competition, restricted access, and harmed consumers.”


Google spokesman Jose Castaneda said the company’s services “help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country” and pledged to “work constructively with regulators.”


What’s the remedy?

Maurice Stucke, a University of Tennessee law professor, said he expects one of the areas investigated will be online advertising markets. Google and Facebook currently dominate these markets.


The investigations may go further by looking at how tech platforms control data. It may also potentially examine “the intersection between competition law and privacy.”


Amazon and Apple may also be in the crosshairs. Critics complained that Amazon wields too much power in online retail. There are also criticisms that Apple may disadvantage rivals offering services in its app store. In the European Union, Google has faced a series of antitrust actions. Also, Amazon is now being targeted by enforcers.


But some analysts say the case against the tech firms faces challenges. This is because the companies have in many cases provided services for free and brought prices down. It then makes it hard to prove they harmed “consumer welfare,” a longstanding judicial precedent.


However, Stucke said it would be wrong to view antitrust law as solely focused on consumer prices. Also, they may apply this to questions of competition and innovation.


The probes could end up with a variety of outcomes including fines, restrictions on conduct or a breakup, Stucke maintained.


“You’d have to show how the remedy would address the concerns,” he said.


Source: AFP

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