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States threaten their own antitrust moves against tech firms

State attorneys general are warning Silicon Valley’s biggest companies they are also planning to get in on the tech crackdown.

Fines are not enough to rein in companies such as Google and Facebook, according to the top law enforcement officials of Louisiana, Nebraska and Tennessee, at a conference Wednesday in Omaha, Nebraska.

“What we need to do as attorneys general is steal a motto from the companies,” said Nebraska attorney general Doug Peterson. “I think we need to move fast, I think we need to be very thorough and thoughtful, and I think once we gather the information, we have to consider whether or not to break things.”

Multiple states are preparing investigations into the tech industry, according to two people familiar with the matter. At least a dozen states are involved, according to a third person familiar with the discussions.

The state moves come as the tech industry faces possible investigations from the Justice Department and the Federal Trade Commission, as well as an antitrust probe by the House Judiciary Committee.

Speaking in Omaha, Tennessee Attorney General Herbert Slatery said “structural change driven by the government may well be necessary” to address the power of large tech platforms.

And Louisiana attorney general Jeff Landry said he fears the consequences of allowing the tech industry’s power to go unchecked.

“What can happen is, corporate power can become greater than government power, and at that point it becomes greater than democracy itself,” he said.

The attorneys general of 41 states, along with Washington DC and Guam, signed a letter to the FTC on Tuesday arguing that the tremendous amounts of personal data held by large tech platforms insulate them from competition and make it harder for smaller startups to enter the market.

The letter, a copy of which was reviewed by CNN, also urged the agency to take a tougher view of tech industry mergers and acquisitions. And it calls for considering privacy as an antitrust issue, echoing remarks by DOJ antitrust chief Makan Delrahim in a speech Tuesday in Tel Aviv.

The Justice Department’s top competition enforcer foreshadowed exactly how large tech platforms like Apple, Facebook and Google could soon find themselves under investigation.

Key digital markets like search, internet advertising, social networks, mobile and desktop operating systems and sales of e-books are dominated by “only one or two significant players,” Delrahim said.

“Where competition is harmed, consumers and markets lose with higher prices, lower quality, lower rate of innovation, less free speech, and even lower privacy protections,” Delrahim added. “Protecting competition means protecting all of those dimensions of competition.”

Delrahim’s remarks are the most expansive yet regarding the regulatory risk facing Silicon Valley’s biggest companies. The speech offered not only a laundry list of possible issues that antitrust regulators could examine but also arguments about the extent of regulators’ powers to oversee those areas.

The speech follows a recent deal between DOJ and the FTC splitting up oversight responsibility for various tech businesses. Under the agreement, DOJ gained jurisdiction over Google, three people familiar with the matter have told CNN. The agency has also reportedly gained oversight over Apple, while the FTC reportedly took responsibility for Amazon and Facebook.

The agencies do not yet appear to have begun any formal investigations. But Delrahim gave strong hints as to his thinking in the speech, which drew explicit parallels between tech’s current moment and the prior breakups of monopolies Standard Oil and AT&T.

He also pointed to the US government’s landmark antitrust case against Microsoft, lessons from which Delrahim said can be translated to other technology markets.

In particular, he said, Microsoft’s bundling of Internet Explorer with the Windows operating system threatened independent Web browser makers and raised anti-competitive concerns. Some policy experts have compared the Microsoft case to recent European penalties against Google targeting the way it tied proprietary apps — like YouTube and Maps — to its Android operating system. Google has since changed its approach to licensing to comply with the European Union penalty.

Delrahim also laid explicit claim to privacy issues, which he said are linked to competition in that companies in a healthy market can work to outdo one another on pro-privacy features. Though not traditionally considered an antitrust issue, tech companies’ handling of privacy and user data has been a key complaint among industry critics.

The speech came the same day that the House Judiciary Committee kicked off its own antitrust investigation into the entire tech industry with a public hearing on Silicon Valley’s impact on local news media.

CNN News

CNN News

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