The Justice Department and the Federal Trade Commission are preparing to crack down on any anticompetitive activities by tech giants Apple, Google, Amazon, and Facebook, according to a report from Reuters on Monday.
The Justice Department and Federal Trade Commission have reached an agreement with each other in divvying up investigative responsibilities against the big tech firms. The Justice Department was given jurisdiction over any inquiries of possible monopolistic activities carried out by Apple and Google, which is owned by Alphabet Inc., while the Federal Trade Commission will be responsible for any improper behavior by Amazon and Facebook.
It is not yet known when these new investigations might begin, but some of the tech giant stock prices took a tumble on Monday with talk of investigative action.
The Federal Trade Commission declined to comment for this article. The Washington Examiner also reached out to the Justice Department.
Lending some detail to what the Federal Trade Commission could be coming after Facebook over, sources told the Wall Street Journal the Federal Trade Commission might take a backward look at the social media giant’s purchase of WhatsApp and Instagram. Facebook acquired Instagram for $1 billion in 2012 and bought WhatsApp for $19 billion in 2014.
This would not be Facebook’s first brush with the Federal Trade Commission. Back in February, it was revealed that Facebook and the trade commision were engaged in negotiations following allegations that the company had violated its 2011 consent decree with the federal agency. The 2011 settlement between Facebook and the Federal Trade Commission followed years of claims that Facebook had “deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.”
The 2011 agreement stated that Facebook was “barred from making misrepresentations about the privacy or security of consumers’ personal information.” But evidence that Facebook has continued mishandling user data have haunted the company ever since, and in early 2019 it was widely reported that the Federal Trade Commission was still scrutinizing Facebook and that the firm might agree to pay up to $5 billion in fines.
The Federal Trade Commission announced in February that it was forming a major task force, including 17 staff attorneys, that was “dedicated to monitoring competition in U.S. technology markets, investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted.”
This potential increased federal oversight of Facebook and its possible monopolistic activities comes as the tech giant has faced setbacks in two major court cases — one in Delaware and one in the District of Columbia — in recent days. Both cases revolve, at least in part, around reports in March 2018 that Facebook allowed the private data of tens of millions of Facebook users to be purloined by British political consulting firm Cambridge Analytica. Facebook originally kept users in the dark about the breach and began to face increased allegations that the company was monetizing data without gaining consent from its users.
The Delaware case, brought against the company by Facebook shareholders, focuses on the $120 billion in shareholder value that was wiped out in July 2018 after Facebook financial disclosures that came in the wake of the Cambridge Analytica revelations. In October 2018, the Construction and General Building Laborers’ Local No. 79 General Fund (a major Facebook shareholder) filed a complaint in Delaware’s Court of Chancery, seeking to inspect Facebook’s books and records. Other shareholders soon joined the suit.
On Friday, Vice Chancellor Joseph Slights ruled in their favor and allowed their case to move forward, saying that the shareholders who brought the lawsuit “have sustained their minimal burden to demonstrate a credible basis of wrongdoing justifying the inspection of certain of the company’s books and records.” The 57-page opinion from Slights stated that “Facebook shall produce for inspection the books and records designated herein as essential to plaintiffs’ pursuit of their proper purpose.”
D.C. Attorney General Karl Racine filed a separate complaint against Facebook in December 2018 claiming that the company “broke District law and did not follow its own policies to protect the privacy of more than 340,000 Facebook users who reside in the District.” Facebook argued that Racine’s claims couldn’t withstand scrutiny and that the D.C. court lacked jurisdiction, and tried to dismiss or stay the proceedings.
But on Friday, Fern Flanagan Saddler, an associate judge for the Superior Court of the District of Columbia, made it clear that he didn’t agree with Facebook.
“This case presents the novel issue of personal jurisdiction in the realm of online social media and the distribution and maintenance of Face book users’ personal data,” Saddler said in a 33-page order. “Based upon the arguments of counsel, the parties’ filings, and the entire record herein, Defendant Facebook, Inc.’s motion to dismiss, or in the alternative, to stay proceedings, is hereby denied.“
“We were confident that our complaint, the first filed by a State Attorney General against Facebook, stated a meritorious claim,” Racine said in a statement. “We look forward to holding Facebook accountable.”
Both Republicans and Democrats in Congress have issued increased warnings about the power and activities of large Silicon Valley companies. President Trump has complained about what he sees as large-scale censorship of conservatives on social media, while presidential contenders like Sen. Elizabeth Warren, D-Mass., have called for breaking up Facebook, Amazon, and Google.
The Democrat-led House Judiciary Committee announced its own “bipartisan investigation into competition in digital markets” on Monday. Both Democrats and Republicans signaled their support for the move as the committee raised concerns that “a small number of dominant, unregulated platforms have extraordinary power over commerce, communication, and information online.”
“Based on investigative reporting and oversight by international policymakers and enforcers, there are concerns that these platforms have the incentive and ability to harm the competitive process,” the House Judiciary Committee said in a statement.
