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The Department of Justice Announced a Review of Big Tech and Its Market Power

The Department of Justice Announced a Review of Big Tech and Its Market Power

The Department of Justice announced on Tuesday that it has launched a broad probe into whether big tech companies are illegally harming their compet

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  • The Department of Justice announced on Tuesday that it has launched a broad probe into whether big tech companies are illegally harming their competitors and stifling innovation.
  • The DOJ did not cite any of specific companies in its press release, but its reference to “market-leading online platforms” in social media, search, and e-commerce was widely interpreted to mean Google, Facebook, and Amazon.
  • The investigation is the latest antitrust probe looking into “Big Tech” and separate from the potential investigations into Amazon, Apple, Facebook, and Alphabet.
  • The department said the probe will address “widespread concerns” that people and industries alike have raised regarding competition in the search, social media, and online retail markets.
  • Visit Business Insider’s homepage for more stories.

The US Department of Justice has launched a broad probe into top “online platforms” for search, social media, and e-commerce to determine whether they are stifling competition and innovation, the department said in a press release on Tuesday.

The DOJ did not cite any specific companies, but the announcement left no doubt that AlphabetFacebook,Amazon, and Apple were all under the agency’s scrutiny. Shares of the four “Big Tech” companies all fell in after-hours trading immediately after news of the government probe emerged.

Citing “widespread concerns” expressed by consumers, businesses, and entrepreneurs, the Justice Department said it would review “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition.”

The review is the government’s latest move to take a tougher line with Big Tech and is separate from the various other known investigations and reviews of Amazon, Apple, Facebook, and Alphabet that are already being carried out by the DOJ and the Federal Trade Commission.

That yet-to-be announced decision by the FTC is already drawing criticism for being too lenient on Facebook, which has a $578 billion market cap. Earlier on Tuesday, The Washington Post reported that the FTC never deposed Facebook CEO Mark Zuckerberg in its investigation.

Dan Ives, an analyst at Wedbush Securities, described the DOJ news as a “shot across the bow” for tech companies but said it was unlikely to result in drastic actions.

“We ultimately believe this is more noise vs. the start of broader structural changes across the tech food chain and will likely result in business model tweaks and potential DOJ/ FTC fines in a worst case scenario rather than forced breakups of the underlying businesses,” Ives said.

Under attack from all sides.

Long treated as national champions, the largest US tech companies have suddenly found themselves under scrutiny from both ends of the political spectrum. President Donald Trump has echoed right-wing talking points that social-media platforms censor conservative opinions and commentators, and he has publicly feuded with Amazon CEO Jeff Bezos.

Democratic presidential candidates, meanwhile, including Sen. Elizabeth Warren, have called for companies like Facebook and Google to be split up.

According to The Wall Street Journal, which cited anonymous DOJ officials, there is no clear end game for the Big Tech probe, but there are multiple options “on the table.” The broad investigation could also lead the DOJ to investigate individual companies, The Journal said, and move beyond antitrust concerns.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Assistant Attorney General Makan Delrahim said in Tuesday’s press release. “The Department’s antitrust review will explore these important issues.”

Shares of Amazon, Apple, Facebook, and the Google parent company Alphabet each fell roughly 1 percent in after-hours trading on Tuesday but later rebounded and were trading at flat or slightly above their closing prices.

This article is from Inc.com

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