Top antitrust enforcer at DOJ reveals 3 ways the agency could make a case against big tech companies like Google and Apple

Chip Somodevilla/Getty ImagesThe Department of Justice will be looking at the tech companies for signs of three broad areas of potentially anticompetitive conducts, Assistant Attorney General Makan Delrahim said Tuesday.
  • The head of antitrust at the Department of Justice said Tuesday enforcement officials will be scrutinizing the big tech companies for signs of at least three broad categories of anticompetitive conduct.
  • Conduct that could raise red flags include signs of collusion, exclusive arrangements, and certain mergers and acquisitions, Assistant Attorney General Makan Delrahim said.
  • Taking issue with the notion that the antitrust laws are inadequate to deal with the tech giants, Delrahim cited numerous examples of how the DOJ has targeted anticompetitive practices in the industry in the past.
  • Visit Business Insider’s homepage for more stories.

The Justice Department’s top antitrust official on Tuesday laid out the types of behaviour the agency’s going to be looking for as it scrutinizes the big tech companies for antitrust concerns.

The department will be looking for signs of three broad categories of potentially anticompetitive behaviour, Assistant Attorney General Makan Delrahim said in a speech at a conference in Tel Aviv, Israel. Those categories include collusion among particular companies; exclusivity arrangements; and acquisitions, particularly of nascent competitors, he said.

“As we think about antitrust enforcement in the digital economy, the key issues that antitrust enforcers must untangle are whether a company is growing due to superior price, quality, and innovation, or whether some transaction or business practice is, on balance, anticompetitive in purpose and effect,” Delrahim said in his speech, which CNBC previously reported.

The Department of Justice and the Federal Trade Commission have agreed to divvy up responsibility for the big tech companies, according to recent reports. The DOJ will oversee antitrust scrutiny of Google and Apple, while the FTC will look into Amazon and Facebook, according to the reports.

The DOJ has targeted tech before

Delrahim did not discuss the current inquiries into those companies. But he did dispute claims by some critics that the current antitrust laws either can’t be applied or would be difficult to use against today’s tech giants, citing numerous examples of how enforcement officials have taken action to stop anticompetitive behaviour in the tech industry.

Companies can violate antitrust laws when they coordinate with other companies to fix prices or dominate markets. In 2008, the DOJ quashed Google’s planned deal with Yahoo to take over the sale of search ads on Yahoo’s sites, Delrahim noted. It also filed a series of complaints between 2010 and 2012 against a collection of tech companies, including Apple, Intel, and Google, alleging that they had conspired to artificial keep salaries of tech workers in check by agreeing not to poach each other’s employees, he said.

“The [DOJ’s] Antitrust Division may look askance at coordinated conduct that creates or enhances market power,” he said.

Corporations have also gotten into trouble over exclusivity deals, which can bar partners from offering customers competing products or suppliers from dealing with rival firms. The Microsoft antitrust trial was largely about its effort to bar computer makers from pre-installing any web browser on their devices other than its Internet Explorer software, Delrahim noted.

“The Microsoft case … is a useful illustration of how problematic exclusive tying arrangements may occur in technology markets,” he said. “This theory is broadly applicable to other technology markets,” he continued.

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The other area Delrahim discussed where companies can run afoul of antitrust law is through mergers and acquisitions. Acquisitions can be beneficial for competition in certain cases, he said. But in other cases it can serve to throttle competition and stymie innovation, he said.

Standard Oil and AT&T show how mergers can hurt competition

Standard Oil, the archetype of the early 19th and 20th-century monopolist, amassed its power in part through acquiring rivals, Delrahim noted. So too did AT&T, the once-dominant telephone company, he said.

“It is not possible to describe here each way that a transaction may harm competition in a digital market,” he said, “but I will note the potential for mischief if the purpose and effect of an acquisition is to block potential competitors, protect a monopoly, or otherwise harm competition by reducing consumer choice, increasing prices, diminishing or slowing innovation, or reducing quality.”

At least on the face of things, the big tech companies would seem to be most vulnerable on the exclusivity and acquisition fronts.

Google already was fined $US5 billion by the European Union for requiring phone makers that wanted to use its version of the Android operating system and its Google Play store to include with them its search and Chrome browser apps. Apple is under fire for its control of the iOS App Store, which is the only authorised way to get applications on iPhones and iPads.

Meanwhile, there have been growing calls for Facebook to be forced to unwind its acquisitions of Instagram and WhatsApp, which some have argued were represented potential competitors to the social-networking giant.

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