Big tech faces vigorous antitrust enforcement in 2020

With mounting political pressure from Congress, the Trump administration, and multiple Democratic presidential candidates, 2020 is shaping up to be a year for antitrust enforcement against major technology firms. Federal and state antitrust enforcers are hoping to build on investigations into digital markets that they began last year.

In 2019, both the Federal Trade Commission and the U.S. Department of Justice focused their investigative powers on online platforms. In February 2019, the FTC announced that it would establish its Technology Task Force, a specialized unit to "monitor competition and investigate potential anticompetitive conduct in markets in which digital technology is an important dimension of competition." Over the summer, the DOJ announced investigations into "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." 2019 also saw bipartisan coalitions of state attorneys general undertaking their own investigations into digital platforms including Facebook and Google.

All eyes will continue to be on antitrust enforcement in digital markets, as these investigations kick into high gear in 2020. On Feb. 11, the DOJ submitted a budget request to Congress, seeking a 13.2% increase in funding for the Antitrust Division including an additional $8.2 million to hire 55 new attorneys and nearly three-dozen additional staff members. This funding request follows a recent hiring announcement by the DOJ for an unspecified number of new technology trial attorneys for two-year appointments in the Northern District of California, home to tech giants Google, Facebook and Apple. The DOJ and at least seven state attorneys general also met within the last month to share information on their respective investigations into anticompetitive conduct by Google, commencing what is likely to be a periodic dialogue that could lead to collaborative enforcement actions.

Just weeks ago, the FTC voted unanimously to invoke its investigative power under Section 6(b) of the Federal Trade Commission Act to look into a decade's worth of mergers and acquisitions by U.S. technology companies that occurred at purchase prices below the thresholds for mandatory reporting to antitrust regulators under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The FTC's goal is to investigate "the rationale for such transactions," identify "potentially anticompetitive transactions," and determine whether they caused "anticompetitive effects on ... price, innovation or quality of products or services." Already the FTC has demanded that Facebook, Amazon, Apple, Google and Microsoft produce detailed information on hundreds of transactions -- including strategies for corporate acquisitions, appointments to boards of directors, hiring of key personnel from other companies, and non-compete provisions. Although the FTC is conducting its probe under its research, not enforcement, authority, Chairman Joseph J. Simons fired a warning shot when he announced, "It's conceivable we could go back and initiate enforcement actions to deal with these transactions."

So what are the likely antitrust enforcement priorities for 2020? The major technology firms can anticipate at least three areas of focus: (1) using mergers to thwart new competitors; (2) excluding competitors by controlling big data; and (3) leveraging market power to impose unfair terms on competitors. Although there is no way to predict the outcome of the DOJ's and FTC's investigations, here are some likely avenues of inquiry into the dominant tech firms like Google, Amazon, Facebook and Apple.

Antitrust enforcers may challenge are Google's use of its dominance over the internet search market to monopolize online advertising and inhibit advertisers and content publishers that want to work with Google's competitors. Enforcers may investigate whether Google's acquisition of DoubleClick and other nascent competitors allowed it to exclude rivals and control the software tools necessary to connect advertisers and publishers. And Google's ability to leverage its control over big data to favor its own products and services over those of its competitors may be the subject of regulatory enforcement.

Turning to Amazon, antitrust enforcers may consider whether the tech giant is leveraging its ownership of the dominant online marketplace to wield an unfair advantage over third-party merchants on its platform. Enforcers may focus on the extent to which Amazon's control over vast amounts of merchant and customer data has allowed it to squeeze out competitors by imposing unfair terms and fees on vendors, removing vendors from its platform, and using its cloud-computing division to copy rivals' software products and integrate them into its own platform. Antitrust enforcers can be expected to review Amazon's ability to use its data unfairly to determine competing vendors' best-selling products and sell its own versions at discounted prices. Although these practices may result in lower prices for consumers in the short run, they are likely to reduce product quality and may leave consumers at the mercy of a single behemoth if it is successful in eliminating competition from other online vendors.

Antitrust enforcers are also likely to review whether Facebook stifled competition through its acquisition of rivals such as WhatsApp and Instagram, and whether it used its market power to preclude competitors such as Twitter's video app, Vine, from accessing its platform. Although the FTC already fined Facebook $5 billion for violating consumer privacy, antitrust enforcers may continue to evaluate whether the company obtained monopoly power by deceiving consumers about its commitments to user privacy and using its control over massive consumer data to exclude competitors in online advertising.

Finally, antitrust enforcers are expected to focus on whether Apple uses its control over the Apple App Store to exclude rival products and services while favoring its own. Apple's fee model -- taking 30% of app purchases and in-app payments -- may also come under fire for inflating prices at the expense of iPhone users who cannot purchase apps elsewhere. 