June 3, 2019 / 6:46 PM / 3 months ago

Breakingviews - Google and Amazon are the antitrust appetizer

An illuminated Google logo is seen inside an office building in Zurich September 5, 2018. REUTERS/Arnd WIegmann

By Robert Cyran and Gina Chon

NEW YORK/SAN FRANCISCO (Reuters Breakingviews) - At some point, antitrust investigations of Google and Amazon.com become a no-brainer. As a step in that direction, the Federal Trade Commission and Justice Department, which police U.S. competition issues, have divvied up responsibility for the tech giants, according to news reports. That could create ammo for future fights. Facebook ought to worry too.

Detractors of tech giants often struggle to prove consumers are being harmed by their huge scale. On the contrary, internet users are lavished with free services by Google and its $719 billion parent Alphabet, and countless products at generally low prices by the $836 billion Amazon. A previous FTC investigation into whether Google unfairly favored its own offerings ended with a whimper in 2013. Facebook already expects to be fined around $5 billion by the FTC for privacy issues, but that is tiny for a company with a market capitalization of $470 billion.

Tech companies are shielded in part by their markets being new, ill-defined and often discretionary. Yet their dominance is hard to deny. Amazon controls about half of the U.S. e-commerce market, eMarketer estimates, and its share of all retail is steadily rising. Alphabet dominates internet advertising thanks to a 95% share of mobile search, according to StatCounter. Facebook has nearly 2.4 billion global monthly active users.

Splitting jurisdiction between the FTC and DOJ – which have overlapping remits – is a logical way to clear the decks. It avoids overloading one agency, duplication of work, and bureaucratic infighting. It will also leave each to explore different approaches to big questions like how troves of data on users and suppliers affects competition – something on which regulators worldwide are feeling their way.

Politics also raises the stakes, notably at the DOJ, which was already scrutinizing social media firms for alleged bias against conservatives after pressure from President Donald Trump. Antitrust scrutiny of Google has been informed partly by competitors’ complaints, including those by Oracle, whose Co-Chief Executive Safra Catz served on Trump’s transition team.

In the past, U.S. regulators have failed to make a dent on Google and software giant Microsoft, and they may achieve little again. These investigations could, however, establish important precedents that, a few years from now, inform more dramatic skirmishes.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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