The US Department of Justice (DoJ) has launched an investigation into the country's major tech firms over growing fears they have become too powerful.
The department’s antitrust arm announced on Tuesday that it intends to review the world’s biggest “online platforms” in a bid to assess whether they have risen to power through “illegal practices” that have made it difficult for smaller firms to succeed, The Daily Telegraph reports.
Though no companies were directly identified by the DoJ, the Telegraph names Amazon, Facebook and Google among the possible tech firms in the department’s firing line.
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“The department’s review will consider the widespread concerns that consumers, businesses and entrepreneurs have expressed about search, social media, and some retail services online”, a DoJ spokesperson said.
Makan Delrahim, assistant attorney general of the DoJ’s antitrust division, added that “digital platforms may act in ways that are not responsive to consumer demands” without the “discipline of meaningful market-based competition”.
Why has the review been launched?
The review comes after fresh calls from US lawmakers, including Democratic presidential hopeful Elizabeth Warren, who believe market-leading companies should face more scrutiny.
Three of the companies believed to be at the centre of the review - Amazon, Facebook and Google - faced a “grilling” in the US Congress last week over the power they wield on markets that include “digital advertising, e-commerce and cloud computing”, The Guardian says.
During the hearing, Amazon executives were questioned over whether fees imposed on third-party sellers using the platform “create a monopoly of power”, The Guardian adds. Facebook, meanwhile, was probed over “copying features of companies that decline to be acquired.”
The investigation also comes off the back of numerous penalties imposed on tech giants for violating antitrust laws outside of the US.
Google, for example, has been handed a trio of major fines by the European Union totalling €8.2bn (£7.3bn) over the past three years for breaking antitrust laws. The tech firm was deemed to have used its Android mobile operating system to abuse its “dominance” in the smartphone market and “forced its AdSense customers” only to use Google’s services.
The announcement marks a “policy shift” by the US government, which has traditionally let “Big Tech” run its course with little restriction, The Sunday Times notes.
What’s been the response?
Speaking to the Financial Times, David Balto, a former policy chief at the US Federal Trade Commission (FTC), said the announcement shows that the DoJ is taking sole responsibility in challenging today’s major tech companies.
“It would seem to be a poor use of government resources” if the FTC were to get involved with the probe, he said.
However, Balto said that any legal sanctions against the tech companies could still be a long way off, despite the growing number of politicians - including President Trump - calling for swift action.
“There is a tremendous distance between the concerns that are being raised and the conclusion by a court that consumers have been harmed”, he said.
Meanwhile, Daniel Ives, an analyst at Los Angeles-based research firm Wedbush Securities, told the BBC that the DoJ’s announcement was a “major shot across the bows” for tech firms.
But it’s unlikely that the DoJ will give in to Warren’s calls to break up the big tech firms, he added. Instead, Ives believes that the review will result in a few “business model tweaks” or financial penalties.
The tech companies believed to be at the centre of the review have yet to comment.
