Already wearing Bull’s-eyes from data privacy lapses, Facebook, Google, and their fellow tech giants now need to worry about competition and the prospect of retroactive merger reviews.
On Feb. 26, the Federal Trade Commission’s Bureau of Competition announced the creation of a task force focused on monitoring competition in U.S. technology markets, “investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted.”
To create the new Technology Task Force, the Bureau of Competition “will draw upon existing staff and expertise to enhance the Bureau’s focus on technology-related sectors of the economy, including markets in which online platforms compete,” the FTC announcement says. The creation of the task force will be modeled on the FTC’s Merger Litigation Task Force, launched in 2002 by then-Bureau of Competition Director Joe Simons.
“The 2002 task force reinvigorated the Commission’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,” the Commission said.
Task force members—which will include approximately 17 staff attorneys—will be drawn from divisions within the Bureau and will include attorneys with unique expertise in “complex product and service markets and ecosystems, including markets for online advertising, social networking, mobile operating systems and apps, and platform businesses,” the FTC said. The task force will also include a “Technology Fellow” to provide technical assistance and expertise to support the task force’s investigations.
Task force members will coordinate with their counterparts in the FTC’s Bureau of Consumer Protection who also focus on technology platforms.
In addition to examining industry practices and conducting law enforcement investigations, the Technology Task Force will, among other things, coordinate and consult with staff throughout the FTC on technology-related matters, including prospective merger reviews in the technology sector and post-merger reviews.
“The role of technology in the economy and in our lives grows more important every day,” FTC Chairman Joe Simons said of the new task force. “It makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition.”
The new task force will be led by Patricia Galvan, currently a deputy assistant director of the Mergers Division, and Krisha Cerilli, currently counsel to the director. It will be overseen by Director Bruce Hoffman, Deputy Director Gail Levine, and Associate Director for Digital Markets Daniel Francis. The Technology Task Force will also draw support from economists from the FTC’s Bureau of Economics.
“Technology markets, which are rapidly evolving and touch so many other sectors of the economy, raise distinct challenges for antitrust enforcement,” Hoffman said. “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 creation of the new task force is probably not much a surprise to the industry it will scrutinize. In recent months, the FTC has been positioned by many, including legislators and even some big tech executives, as the preferred agency to enforce consumer data protections.
Tech watchers have also focused on the Commission amid speculation that it will soon hit social media giant Facebook with a massive fine for violating a 2011 data privacy-related consent decree amid revelations that it allowed Cambridge Analytica, a U.K.-based consulting firm hired by President Trump’s 2016 campaign staff, access to the personal information of more than 87 million users.
In January, a coalition of consumer advocacy groups—among them the Electronic Privacy Information Center, Government Accountability Project, and Open Markets Institute—wrote to the FTC, urging it to break up Facebook as a means to limit its influence.
“Almost ten years have passed since many of our organizations first brought the Commission’s attentions to Facebook’s business practices that threaten privacy and are in fact ‘unfair and deceptive trade practices.’ And eight years have passed since the Commission first announced the settlement with Facebook. And now almost a year has passed since the Commission announced it was reopening the investigation following the Cambridge Analytica breach,” they wrote. “Remarkably, the Commission has not imposed a single fine against Facebook, nor has the Commission suggested that additional authority was needed.”
“Given that Facebook’s violations are so numerous in scale, severe in nature, impactful for such a large portion of the American public and central to the company’s business model, and given the company’s massive size and influence over American consumers, penalties, and remedies that go far beyond the Commission’s recent actions are called for,” the letter adds.
In addition to hefty fines—and with a recommendation of a $2 billion hit for the Cambridge Analytica scandal—the groups urged the FTC to consider “structural remedies.”
“The evidence is also clear that Facebook breached its commitments to the Commission regarding the protection of WhatsApp user data,” the letter says. “As this occurred after the initial consent order, the FTC should require Facebook to unwind the acquisition of both WhatsApp and Instagram. The companies should be reestablished as independent entities and Facebook should be required to disgorge the personal data unlawfully acquired from those firms. This will also help restore competition and innovation for Internet messaging and photo app services, two important goals for the future of the Internet economy.”
As the FTC task force takes shape, it might not be alone in its efforts. In pre-confirmation testimony before Congress, new Attorney General William Barr also suggested the Department of Justice was keen to escalate its anti-trust reviews of the largest tech companies.