With its groundbreaking antitrust lawsuit against Facebook, the Federal Trade Commission is facing more than just a fight against a multi-billion dollar tech giant – fighting to regain the credibility that could determine its future.
The FTC has been widely criticized by lawmakers on both sides of the aisle, following the establishment of the confidentiality of technological hawks considered toothless. In July 2019, the agency resolved a $ 5 billion Cambridge Analytica privacy investigation following the $ 5 billion scandal, accounting for about 9% of the company’s revenue in 2018. Shortly thereafter, it allegedly violated children’s privacy on YouTube by Google for $ 170 million.
“The FTC is stupid and crazy to rely solely on money to punish decades of privacy violations and continued profits,” said Sen. Richard Blumenthal, D-Conn. posted on Twitter when solving Facebook.
Long before that, the agency closed an investigation into Google’s competitive practices without bringing in staff-recommended fees. Nearly a decade later, the DOJ took on competition charges against the search giant.
The commission’s perceived failure to hold the tech giants accountable in the eyes of lawmakers threatened the very existence of the FTC. Senator Josh Hawley, R-Mo., Last year proposed downgrading the entire agency to a division of the Department of Justice and strengthening the full enforcement power of the DOJ Antitrust Division.
This gives the FTC’s action against Big Tech firms added value. The FTC is different from the DOJ in that it is independent of other branches of government. FTC President Joe Simons testified last year that the structure is actually what makes the agency so valuable, although he agreed with DOJ antitrust chief Makan Delrahim that the division of antitrust power between two agencies is causing inefficiencies.
This was the context in which Simons made the decision to break away from his Republican colleagues in order to be the decisive vote in bringing an antitrust case against Facebook in federal court. Just about a week later, he joined a majority of his colleagues in voting on a comprehensive study on the privacy practices of nine technology companies.
Simons made it a priority in his time to lead the commission to expand and focus his expertise in the technology sector, said a person familiar with the FTC’s thinking, who was only allowed to speak in the background. This meant setting up a technology working group within the commission, which is now known as the technology application division.
In this context, the FTC decided to continue an antitrust investigation on Facebook. Facebook first revealed the investigation last year, right after a $ 5 billion fine from the agency. The FTC typically opens investigations after one of three things happens, according to the source: 1) someone complains about a company’s behavior to the commission, 2) states or the Department of Justice send a case to the agency, or 3) new information comes to light through public reporting.
For Facebook, it was the third option that determined the investigation, the source said, refusing to specify the new information that set it in motion.
The FTC’s decision to charge Facebook has been applauded by recent critics. The lawsuit is a widespread indictment of Facebook’s operations and acquisition strategy, which the Commission claims demonstrates its attempts to illegally maintain monopoly power on personal social networks. The case focuses mainly on Facebook’s Instagram and WhatsApp purchases – two mergers that the FTC had to analyze before being consumed.
Facebook’s chief lawyer called the process an attempt by the government to get a “fix”, sending a terrible warning to US business that no sale is ever final.
While, in terms of the law, the FTC’s decision not to block the mergers at first does not extend any presumption of legality, Facebook is likely to continue to press the point in court, according to antitrust experts.
“Certainly, some of these warning signs were there,” Delrahim, the DOJ’s antitrust chief, said in an interview with CNBC this week. “If you go back to Microsoft, the Federal Trade Commission also looked at this and didn’t bring a case until the Clinton administration’s Justice Department took over under Joel Klein and brought the case. This is not an FTC versus DOJ comment, but it is a comment that sometimes, when you don’t have decision-making in an executive, decision-making becomes much more difficult and may not be optimal. “
Delrahim is in favor of a structure in which the responsibility is concentrated in one person, as in the Antitrust Division, where he has the last word in the enforcement action. At the FTC, on the other hand, five commissioners must vote on whether to take action, with a maximum of three commissioners at a time coming from the same political party.
“There is no doubt in my mind that what needs to be done is to combine the two agencies, but this is not a decision for me to make,” Delrahim said.
The source familiar with the FTC’s thinking defended the commission’s structure, saying the agency’s bipartisan tradition means that cases go through rigorous debates and checks before they ever reach the public eye, making them stronger along the way. They pointed to the FTC’s litigation file, rejecting the idea that the deliberative model had slowed down its efforts. The agency has brought important, albeit less followed, antirust cases in the technology sector in recent years, such as against chip maker Qualcomm and electronic prescribing platform Surescripts, they added.
When it comes to the Facebook case itself, Delrahim described many parts of it as “solid,” especially the aspect that involves Facebook’s alleged use of its application programming interfaces (APIs) to remove competitors from the platform. to. He also defended the legitimacy of privacy as an element of potential harm to consumers.
“The issue of privacy as a quality element of competition is a very legitimate issue,” Delrahim said. “A lot of people in this debate have confused antitrust standards only about the effects on prices, and that’s not true.
Only the introduction of such a comprehensive process is already a significant step for the FTC. But it comes with high stakes. If the government fails to prove its case in court, it risks creating more jurisprudence that is unfavorable to future monopoly challenges, possibly defeating the continued application of the area.
But if he wins, he could usher in a new era of antitrust law enforcement.
“If you never bring a section 2 [Sherman Antitrust Act] as a government, start falling in love with monopolists, “said Sam Weinstein, a former DOJ antitrust lawyer who now teaches at Cardozo Law.” They begin to think, “We can do whatever we want here, the government is afraid of litigation. ‘ “
Weinstein said the cases themselves “are terrible PR” for companies and shows colleagues “the government has the will to do this. It is no longer theoretical; it happens”.
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