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Date: February 28, 2019
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FTC’s New Task Force Could Be Trouble for Big Tech

John D. McKinnon
The Wall Street Journal
February 28, 2019

With a mandate to bring sharper focus to antitrust issues in the tech world, a new Federal Trade Commission task force could emerge as a powerful brake on the nation’s internet giants.

As Silicon Valley powerhouses have grown through acquisitions, federal regulators have come under fire for failing to rein in what some see as anti-competitive effects from deals such as Facebook Inc.’s acquisition of WhatsApp and Instagram.

FTC officials say the Technology Task Force’s mandate will include reviewing acquisitions that have already been approved, pointing to bigger regulatory headaches ahead for a sector already on defense for how it exploits data from consumers.

“We’re thrilled the FTC is engaged,” said Robert Engel, chief spokesman for the Free and Fair Markets Initiative, an activist group that has targeted Amazon.com Inc. for what it views as monopolistic behavior. FTC officials “have a real opportunity, particularly if they focus on the main offenders.”

Legal experts said the FTC move suggests the agency could be open to more innovative approaches in pursuing possible antitrust cases in the sector. To an extent, oversight of the sector has been hindered by antitrust rules and enforcement policies designed for an industrial economy.

“My view is the agency is more open to that now than at any time” in recent years, said Kevin Arquit, a former director of the FTC competition bureau who’s now at Kasowitz Benson Torres. “What this really does is challenge, are those assumptions true?”

Mr. Arquit said some of the agency’s openness to new antitrust solutions on tech issues was likely due to the wide diversity of views among the new commissioners on the five-member FTC, as well as the GOP chairman, Joseph Simons, who he said had “strong views but a real willingness to consider new ideas.”

An agency spokesman said that “right now, there is no specific plan to consider or reconsider rules or guidelines as they relate to the technology sector.” The spokesman added that if the agency were to consider changes related to competition rules in the technology sector, “the task force certainly would be consulted, but that is not why the task force was created.”

Others said the creation of the task force underscored the agency’s increasing institutional recognition of competition problems in the sector.

Still, some FTC critics questioned how aggressive the agency would be, particularly given what they view as its lackluster enforcement record in recent years.

“Government has to do more to protect consumers!” Rep. David Cicilline (D., R.I.) said in a tweet Tuesday that nevertheless praised the FTC’s move as “an important step toward restoring competition online and keeping the internet open and innovative.” Mr. Cicilline heads the House antitrust subcommittee.

The new task force will be drawn from existing staff, and will include 17 FTC attorneys. Many have expertise in areas such as online advertising, social networking, mobile systems and platform businesses, the agency said. The task force also will include a technology fellow, who could help fill what critics view as a gap in the agency’s expertise.

FTC officials said they couldn’t discuss specific cases they would be examining. But they said they would consider breaking up past merger deals that are creating harms.

Big internet companies were generally staying mum on the task force. Facebook, Google and Amazon all declined to comment.

Ed Black, president of the Computer and Communications Industry Association, said his group welcomed the creation of the group, hoping it would lead to better understanding of technology-market dynamics. “We look forward to working with the task force to ensure the best outcomes for consumers,” he said.

Some tech advocates contend that cracking down on the tech sector could backfire for consumers as well as the economy, stifling innovation and growth.

The FTC’s action comes as some consumer advocates—as well as some politicians, particularly on the left—have begun urging breakups of some of the big tech companies, including Facebook.

Marc Rotenberg, president of the Electronic Privacy Information Center, said his group was glad to see the FTC’s announcement, but added that the task force “is no substitute for meaningful enforcement.” His group is among a number of activist organizations that have urged the FTC to require breakup of Facebook in response to its privacy missteps.

The Open Markets Institute, a group that aims to expose monopolistic practices, called on the agency to “do its job” and enforce antitrust laws against the dominant platforms—Facebook, Google and Amazon. It decried what it termed the agency’s practice of “slapping these companies on the wrist with fines that ultimately do not change their behavior.”

Mr. Engel’s group, the Free and Fair Markets Initiative, whose backers include labor and minority groups, is seeking to bring scrutiny to Amazon’s use of its own private-label products that compete with outside vendors on the site.

Addressing that issue in a statement, Amazon said private-label products were “a common retail practice, and are good for customers and competition.” Amazon’s private-label products represented about 1% of its total sales, it said, far less than many other big retailers.

The task force is modeled in part on a prior task force on merger litigation that agency officials credit with reinvigorating some areas of enforcement during the administration of President George W. Bush.

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The Free & Fair Markets Initiative (FFMI) is a non-profit coalition of businesses, consumer advocacy groups, workers and community activists committed to scrutinizing and highlighting emerging market trends that are stifling competition and innovation, influencing federal and local government spending, putting consumer data in harm’s way and limiting consumer choice. For a list of members, please visit https://freeandfairmarketsinitiative.org/about-us/members/. For more information on the Free & Fair Markets Initiative, please visit https://freeandfairmarketsinitiative.org.