The U.S. Justice Department sent the strongest signal yet that it’s prepared to take on technology giants like Facebook and Google, announcing a broad antitrust review into whether the companies are using their power to thwart competition.
The department’s antitrust division disclosed plans Tuesday to scrutinize tech platforms following mounting criticism across Washington that the companies have become too big and too powerful. The department didn’t specify which firms it would look at but strongly suggested Facebook Inc., Alphabet Inc.’s Google and Amazon.com Inc. are in the cross-hairs.
“The history of these DOJ investigations is that they kill the company that they investigate” as the firm turns its focus to defending itself, said Mark Grady, a law professor at the University of California Los Angeles. “It’s a giant distraction.”
The announcement is the latest sign of the escalating pressure on tech giants, from Capitol Hill to President Donald Trump, who accuses the companies of silencing conservative views. The giants of the industry are under fire over massive collection of user data, failing to police content on their platforms, and claims that they are harming competition and reducing choices for consumers.
The spotlight on the industry will carry into Wednesday when a record $5 billion privacy fine against Facebook is set to be announced by the Federal Trade Commission for a series of privacy violations.
The Justice Department review, led by antitrust chief Makan Delrahim, represents a new level of scrutiny of the industry after news in May that the U.S. antitrust agencies carved up oversight of four tech giants, with the department taking Google and Apple Inc., and the FTC claiming Facebook and Amazon.
Companies are now potentially exposed to investigations by both agencies, because their accord calls for separating the scrutiny by business practices, according to two people familiar with the matter. The Justice Department in its statement suggested that possibility because it signaled that it would look at Amazon and Facebook, even though the FTC will be examining those companies under the agreement.
Attorney General William Barr encouraged the review of the industry, according to one of the people. He met earlier this year with European Union competition chief Margrethe Vestager, who has slapped Google with record fines over antitrust violations, the person said.
Treasury Secretary Steven Mnuchin backed the effort, saying it’s an “important issue” worthy of reporting recommendations to the president.
“If you look at Amazon, although there’s certain benefits to it, they’ve destroyed the retail industry across the United States, so there’s no question they’ve limited competition,” Mnuchin said Wednesday in an interview on CNBC. “There’s areas where they’ve really hurt small businesses, so I don’t think this is a one-size-fits-all, and I don’t have an opinion going in other than I think it’s absolutely right that the attorney general is looking into these issues.”