US announces antitrust review of Big Tech firms

Assistant Attorney-General for Antitrust Makan Delrahim will lead the review of whether Big tech firms have stifled competition (AFP pic) 

WASHINGTON: The United States on Tuesday announced it would begin an antitrust review of major online platforms to determine if they have “stifled” innovation or reduced competition.

The announcement by the Justice Department did not name specific companies but appeared to signal the department was targeting Google, Facebook and Amazon, which dominate key sectors of the digital economy.

It was not immediately clear if the probe would also target Apple, which despite not being the dominant smartphone maker wields power over services via its App Store.

The antitrust division is reviewing “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the Justice Department said in a statement.

It added that investigators are “conferring with and seeking information from the public, including industry participants who have direct insight into competition in online platforms, as well as others.”

The probe comes after the European Union imposed hefty fines on Google over charges that it abused its dominant position and also launched a formal investigation into online commerce leader Amazon.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Assistant Attorney-General for the Antitrust Division Makan Delrahim said.

Breakups unlikely 

US antitrust enforcers have broad authority over companies and can impose fines for violating antitrust law, impose “structural” remedies to allow for more competition or even break them up.

Some lawmakers including Democratic presidential candidate Elizabeth Warren have been calling for a breakup of major tech firms, saying they are too big and powerful.

Breakups have been ordered only for Standard Oil in 1911 and AT&T in the 1980s, and many analysts say they are unlikely to be applied to Big Tech.

Facebook has argued, for example, that a breakup would not address concerns over its privacy missteps, but rather lead to a number of smaller firms with similar issues.

Analyst Dan Ives of Wedbush Securities said in a research note that breakup orders appear unlikely based on current US law.

“We reiterate our belief that this broader Beltway vs. Big Tech battle is more bark than the bite of broader structural changes across the tech food chain and will likely result in business model tweaks… rather than forced breakups of the underlying businesses,” Ives wrote.

“Current antitrust law does not provide for a forced breakup solely due to the size of the business; if it did, Walmart would have been broken up decades ago.