It has been announced by the U.S. Department of Justice that what many see as a long-overdue inquiry into the tech giants, but should the likes of Google, Amazon, and Facebook be concerned?
The decision to investigate whether tech firms compete properly follows heightened scrutiny of Washington-based firms. And it is expected that Facebook will be fined $5bn (£ 4bn) for privacy defilements by the Federal Trade Commission (FTC).
In Europe, meanwhile, the European Commission has fined Google more than £ 7bn in three separate antitrust inquiries. ·
- The strength of technology giants to be tested in the United States
- Should Google, Amazon and Facebook fear this female?
Now, the DoJ, which is viewed as being more readily affected by politics than the FTC, has become the latest to raise pressure on the firms though it did not name the “digital platforms” it was looking into.
It only said that it sought to tackle “wide-ranging issues” about social media, search engines, and internet retail services and whether their activities had harmed customers.
what are the concerns of DoJ??
Firstly, according to Ioannis Kokkoris, professor of law and economics at Queen Mary University in London, it may be worrying to be seen as falling behind European regulators and lawmakers, as well as at the FTC.
The counterparts of the body in Europe shadowed the companies, while he said the DoJ had “done nothing.”
The academic expects the DoJ to look at whether the firms have too much data.
But rather than focusing on privacy concerns, he expects the DoJ to look at whether the tech giants are using that customer information to stifle competition.
He believes the DoJ will also look for items like anti-competitive language in Amazon’s agreements with its providers, and notes that the scope of the inquiry might extend beyond a general look at the industry to become a probe in an individual company.
Is the trump reason?
The president of the United States has definitely provided cause for concern to tech managers. Just last week, he pledged to look at tech entrepreneur Peter Thiel’s recommendations that Google should be investigated for betrayal of its China dealings.
And with Amazon boss Jeff Bezos, who owns the Washington Post, a journal that was critical of the Trump administration, he has constantly sparred.
It was defined by Professor Kokkoris as a “very good coincidence” that this inquiry had been initiated as the administration on the tech companies seemed to be souring.
He said it was unlikely that the DoJ would launch the probe if the administration would unfavorably see it.
What the DoJ could do?
It could ultimately break up the companies. And it has some assistance, not least from co-founder Chris Hughes of Facebook who said that WhatsApp and Instagram, both owned by Facebook, should be turned into distinct businesses.
And US lawmakers have also supported the call. Most particularly, Elizabeth Warren, the prospective US Democratic candidate, said she would consider dismantling the tech giants if she ever got the top job.
Prof. Kokkoris believes this is extremely unlikely, however.
It is very difficult for the judiciary to locate a legal foundation on which to justify the splitting up of a large corporation by US competition law. If there is proof of poor behavior, a judge might possibly make such a complaint. But firms can promise and move forward to fix bad behavior.
And that’s the expectation of Professor Kokkoris. He believes the DoJ might look to alter how the system operates in order to make it more competitive.
At this stage, if he were at the helm of one of the firms, he wouldn’t be too concerned-but he said that might change if the DoJ chooses to test a particular firm.