Trump Administration Calling Out Google and Big Tech

On May 21, 2018, Treasury Secretary Steven Mnuchin urged the DOJ to review the power that large technology firms such as Google have over the U.S. economy.  A “60 Minutes” segment on Sunday devoted to assertions that Alphabet Inc.’s Google wields a destructive monopoly in online search hammered home the notion of the company’s dominance during a time of heightened public concern with technology giants.  The report didn’t include new allegations about the company.  “These issues deserve to be reviewed carefully,” Mnuchin said in a CNBC interview in response to a question about the CBS News report.  “These are issues the Justice Department needs to look at seriously, not for any one company, but as these technology companies have a greater and greater impact on the economy.”

The report highlighted how critics and rivals, such as Yelp Inc., are trying to bring Europe’s antitrust approach to Google to the United States.  Margrethe Vestager, the European Union competition commissioner, told CBS that she is intent on stopping Google’s “illegal behavior” in web search, suggesting that the EC isn’t appeased by the company’s proposed solution for the hefty charges the EU filed last year.  “You have to look at the power they have and it’s something the Justice Department I hope takes a serious look at,” Mnuchin said, though he added that “issues of monopolies are out of my lane” and that it’s up to the DOJ to review antitrust violations.

CBS featured guests who argued Google abuses its dominance in search and search advertising.  It didn’t show any evidence that U.S. lawmakers or enforcement agencies will target the company or mention the potential cases Vestager is pursuing against Google for its Android mobile software and advertising business.

Observations:  The Trump administration is signaling that it wants to scrutinize big tech companies’ two sided digital platforms and their associated network effects.  The EU law has a provision that imposes a special responsibility on dominant firms not to hinder competition.  The U.S. antitrust agencies and Makan Delrahim are in favor of using an evidence-based approach meaning there has to be harm to competition and consumers. But even Delrahim has noted that “in certain platform markets involving network effects, there may be barriers to entry or a tendency toward a single firm emerging as the sole winner” and in those situations, “antitrust enforcers may need to take a close look to see whether competition is suffering and consumers are losing out on new innovations as a result of misdeeds by a monopoly incumbent.”  So, the DOJ and FTC antitrust officials should be “open and receptive” to evidence that some incumbent monopolist tech firms may be engaging in exclusionary conduct, such as below-cost pricing aimed at driving out competitors, to gain control of a market.

The Trump Administration has its eye on Google, Facebook and Amazon and the DOJ has noted that if there is “clear evidence of harm to competition in digital platforms, enforcers must take vigorous action and seek remedies that protect American consumers, so that free markets or consumers don’t instead bear the risk of failure.”

Andre Barlow
(202) 589-1838
abarlow@dbmlawgroup.com