Antitrust probe of Facebook may be first step against Big Tech

New York Attorney General Letitia James. (File/AP)
Updated 07 September 2019
0

Antitrust probe of Facebook may be first step against Big Tech

  • The case may be the first in a series of antitrust actions against Big Tech firms

WASHINGTON: A coalition of US states unveiled on Friday an antitrust investigation of Facebook, the first of what is expected to be a wave of action against dominant technology firms.
New York state Attorney General Letitia James announced the action on behalf of seven other states and the District of Columbia to probe “whether Facebook has stifled competition and put users at risk.”
The case may be the first in a series of antitrust actions against Big Tech firms and highlights growing “techlash,” based on worries about platforms which control the flow of online information and dominate key economic sectors.
“We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising,” James said.
Joining the action were attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, and Tennessee, said James.
Earlier this year the US Justice Department said it would launch a “review” of major online platforms to determine if they have stifled innovation or reduced competition.
It was not immediately clear if the states would be working in coordination with federal officials.
Facebook offered no immediate comment, but in the past it has claimed it is not a monopoly and that consumers have many choices for how to connect with people online.
The new probe “shows how unease with large tech companies is spreading beyond Congress and the federal government agencies to the states,” said Michael Carrier, professor of antitrust law at Rutgers University.
“With each passing day, there are greater fears about these companies controlling our online lives.”
Yet the legal basis for an antitrust action remains unclear, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University.
“It remains to be seen if the (attorneys general) have any merit to their complaints or if they will be conducting a fishing expedition hoping to find some damning evidence,” Goldman said.
“Companies as large as Google or Facebook probably have minor problematic practices the AGs could target, but I’m still waiting for any evidence that would support more structural challenges to the Internet giants’ practices.”
A separate coalition of states was set to launch another antitrust initiative, with Google reportedly a target.
The office of the Texas attorney general scheduled an event Monday in Washington with a “broad coalition of states” to unveil a probe into “whether large tech companies have engaged in anticompetitive behavior that stifled competition, restricted access, and harmed consumers.”
Google spokesman Jose Castaneda said the company’s services “help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country” and pledged to “work constructively with regulators.”
Maurice Stucke, a University of Tennessee law professor, said he expects one of the areas being investigated will be online advertising markets, which are dominated by Google and Facebook.
“This is a great area to look at because the market has been criticized as being opaque,” Stucke said.
Stucke said the investigations may go further by looking at how tech platforms control data, potentially examining “the intersection between competition law and privacy.”
Amazon and Apple may also be in the crosshairs. Critics have complained that Amazon wields too much power in online retail, and that Apple may disadvantage rivals offering services in its app store.
In the European Union, Google has faced a series of antitrust actions and Amazon is now being targeted by enforcers.
Democratic presidential candidate Elizabeth Warren has made a breakup of the big tech firms a part of her campaign platform.
But some analysts say the case against the tech firms faces challenges because the companies have in many cases provided services for free and brought prices down, making it hard to prove they harmed “consumer welfare,” a longstanding judicial precedent.
Jessica Melugin of the Competitive Enterprise Institute said the state officials are stretching the limits of antitrust.
“This sort of high-profile activism may benefit state AGs’ political ambitions, but impose harmful costs on consumers, businesses, and the economy,” she said in a statement.
But Stucke said it would be wrong to view antitrust law as solely focused on consumer prices, and that it may be applied to questions of competition and innovation.
The probes could end up with a variety of outcomes including fines, restrictions on conduct or a breakup, Stucke maintained.
“You’d have to show how the remedy would address the concerns,” he said.


South Korea downgrades Japan trade status as dispute deepens

Updated 18 September 2019

South Korea downgrades Japan trade status as dispute deepens

  • The change comes a week after South Korea initiated a complaint to the World Trade Organization
  • The new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan

SEOUL, South Korea: South Korea on Wednesday dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute.
South Korea’ trade ministry said Japan’s removal from a 29-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes.
The change comes a week after South Korea initiated a complaint to the World Trade Organization over a separate Japanese move to tighten export controls on key chemicals South Korean companies use to manufacture semiconductors and displays.
Seoul has accused Tokyo of weaponizing trade to retaliate against South Korean court rulings ordering Japanese companies to offer reparations to South Koreans forced into labor during World War II. Tokyo’s measures struck a nerve in South Korea, where many still resent Japan’s brutal colonial rule from 1910 to 1945.
According to South Korean trade ministry, the new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan, compared to the five days or less it took under a simpler inspection process provided for favored trade partners.
Lee Ho-hyeon, a South Korean trade ministry official, said the change would affect about 100 local firms that export items such as telecommunications security equipment, semiconductor materials and chemical products to Japan. He said Seoul will work to minimize disruption to South Korean companies.
Japan for decades has enjoyed a huge trade surplus with South Korea, an economy that’s much more dependent on exports. Many major manufacturers heavily rely on parts and materials imported from Japan.
But the dispute is taking a toll. Exports to South Korea from Japan fell 9.4% last month, Japan’s Finance Ministry reported Wednesday.
The trade dispute between the neighbors erupted in July, when Japan imposed tighter export controls on three chemicals South Korean companies use to produce semiconductors and displays for smartphones and TVs, major export items for South Korea. It cited unspecified security concerns over Seoul’s export controls.
A few weeks later, Japan dropped South Korea from its own trade “white list,” triggered a full-blown diplomatic dispute that took relations between the US allies to their worst in decades.
The dispute has spilled over to security issues, with Seoul declaring it plans to terminate a bilateral military intelligence-sharing pact with Japan that symbolized the countries’ three-way security cooperation with the United States in the face of North Korea’s nuclear threat and China’s growing influence.
Following an angry reaction from Washington, Seoul later said it could reconsider its decision to end the military agreement, which remains in effect until November, if Japan relists South Korea as a favored trade partner.
Seoul announced its plans to downgrade Tokyo’s trade status in August before holding a 20-day period to gather opinions on the decision, during which the Japanese government voiced opposition to the move it described as “arbitrary and retaliatory,” Lee said.
He said Seoul needs to strengthen controls on shipments to a country that’s “hard to cooperate with” and fails to uphold “basic international principles” while managing export controls on sensitive materials.
South Korea previously divided its trade partners into two groups in managing export controls on sensitive materials. Following Wednesday’s change, South Korea now has an in-between bracket where it placed only Japan, which would mostly receive the same treatment in trade as the non-favored nations in what had been the second group.