Regulation

FTC Takes Fresh Aim At Big Tech — And Its Previous Mergers

It’s a process that stands not only as a familiar feature of U.S. history, but a part of global economic development stretching back centuries: First comes innovation, then comes growth based on that innovation (not just economic, but cultural and other forms of growth), then comes the regulatory backlash. That’s not a statement about politics, but human nature.

The latest evidence of that came on Tuesday (Feb. 26) from the U.S. Federal Trade Commission (FTC). The agency’s Bureau of Competition has formed what it calls a “task force dedicated to monitoring competition in U.S. technology markets, investigating any potential anti-competitive conduct in those markets, and taking enforcement actions when warranted.”

The new entity, called the Technology Task Force, according to the FTC, will “draw upon existing staff and expertise,” and have “approximately” 17 staff attorneys working for it. Leaders of this new group include Patricia Galvan, currently the FTC’s deputy assistant director of the Mergers III Division, and Krisha Cerilli, counsel to the director.

Task Force Precedent

The Technology Task Force will be “modeled on the FTC’s successful Merger Litigation Task Force, launched in 2002.” According to the FTC, that previous task force “reinvigorated the [FTC]’s hospital merger review program, and also sharpened the agency’s focus on merger enforcement in retail industries, particularly regarding matters involving food, beverages and supermarkets.”

“Technology markets — which are rapidly evolving, and touch so many other sectors of the economy — raise distinct challenges for antitrust enforcement,” said Director of the Bureau of Competition Bruce Hoffman. “By centralizing our expertise and attention, the new task force will be able to focus on these markets exclusively — ensuring they are operating pursuant to the antitrust laws, and taking action where they are not.”

The FTC said one area of focus for the Technology Task Force is mergers — not just proposed, but past mergers, or what the federal agency described as “reviews of consummated technology mergers.” Investigating completed mergers could lead to what one report called “companies divesting previously approved assets,” though nothing in the FTC announcement approached that level of specificity.

The formation of the FTC’s Technology Task Force also comes amid more focus from the U.S. House of Representatives (which went under Democratic control earlier this year) on antitrust issues, including those involving the tech industry.

Other Moves

The launch of this new technology-focused, federally based group comes after U.S. Senators Edward Markey and Richard Blumenthal asked the FTC to act on a complaint that Facebook knowingly encouraged children to spend money on the platform. This serves as another signal among many that, in the U.S. and elsewhere, lawmakers and regulators are taking closer looks at the technology industry, as well as topics that concern digital payments and commerce — topics that can go beyond antitrust concerns, but are often related to them.

Facebook and Google, of course, stand as some of the most targeted for such probes and action (not surprising, given their scope and dominance). Earlier this month, for instance, news emerged that Facebook is being investigated by at least three additional states — Connecticut, Illinois and Pennsylvania — regarding the alleged mishandling of user data. New York, New Jersey and Massachusetts are also looking to find any potential violations, and North Carolina is reportedly also part of the probe.

Google, for its part, is the recipient of increased antitrust pressure from Europe. Last year, for instance, the European Union (EU) slapped Google with a $5.1 billion antitrust fine over what the EU called an abuse of the Android operating system. European politicians and regulators are also putting more pressure on digital marketplaces — a push that involves Amazon as well.

As part of the EU’s Digital Single Market push, regulators and politicians who are part of that body have, in the words of the EU, “reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.” For the big online marketplace operators, that means more restrictions on such tasks as account suspensions and terminations, more disclosures about search engine rankings and business practices, and more power for marketplace sellers when it comes to complaints and other problems.

Of course, it remains to be seen what kind of impact the FTC’s new Technology Task Force will have on the various workings of digital payments and commerce, but it seems like a bad bet to expect such pressure to diminish any time soon.

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