Antitrust probe of Facebook may be first step against Big Tech

New York Attorney General Letitia James. (File/AP)
Updated 07 September 2019

Antitrust probe of Facebook may be first step against Big Tech

  • The case may be the first in a series of antitrust actions against Big Tech firms

WASHINGTON: A coalition of US states unveiled on Friday an antitrust investigation of Facebook, the first of what is expected to be a wave of action against dominant technology firms.
New York state Attorney General Letitia James announced the action on behalf of seven other states and the District of Columbia to probe “whether Facebook has stifled competition and put users at risk.”
The case may be the first in a series of antitrust actions against Big Tech firms and highlights growing “techlash,” based on worries about platforms which control the flow of online information and dominate key economic sectors.
“We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising,” James said.
Joining the action were attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, and Tennessee, said James.
Earlier this year the US Justice Department said it would launch a “review” of major online platforms to determine if they have stifled innovation or reduced competition.
It was not immediately clear if the states would be working in coordination with federal officials.
Facebook offered no immediate comment, but in the past it has claimed it is not a monopoly and that consumers have many choices for how to connect with people online.
The new probe “shows how unease with large tech companies is spreading beyond Congress and the federal government agencies to the states,” said Michael Carrier, professor of antitrust law at Rutgers University.
“With each passing day, there are greater fears about these companies controlling our online lives.”
Yet the legal basis for an antitrust action remains unclear, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University.
“It remains to be seen if the (attorneys general) have any merit to their complaints or if they will be conducting a fishing expedition hoping to find some damning evidence,” Goldman said.
“Companies as large as Google or Facebook probably have minor problematic practices the AGs could target, but I’m still waiting for any evidence that would support more structural challenges to the Internet giants’ practices.”
A separate coalition of states was set to launch another antitrust initiative, with Google reportedly a target.
The office of the Texas attorney general scheduled an event Monday in Washington with a “broad coalition of states” to unveil a probe into “whether large tech companies have engaged in anticompetitive behavior that stifled competition, restricted access, and harmed consumers.”
Google spokesman Jose Castaneda said the company’s services “help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country” and pledged to “work constructively with regulators.”
Maurice Stucke, a University of Tennessee law professor, said he expects one of the areas being investigated will be online advertising markets, which are dominated by Google and Facebook.
“This is a great area to look at because the market has been criticized as being opaque,” Stucke said.
Stucke said the investigations may go further by looking at how tech platforms control data, potentially examining “the intersection between competition law and privacy.”
Amazon and Apple may also be in the crosshairs. Critics have complained that Amazon wields too much power in online retail, and that Apple may disadvantage rivals offering services in its app store.
In the European Union, Google has faced a series of antitrust actions and Amazon is now being targeted by enforcers.
Democratic presidential candidate Elizabeth Warren has made a breakup of the big tech firms a part of her campaign platform.
But some analysts say the case against the tech firms faces challenges because the companies have in many cases provided services for free and brought prices down, making it hard to prove they harmed “consumer welfare,” a longstanding judicial precedent.
Jessica Melugin of the Competitive Enterprise Institute said the state officials are stretching the limits of antitrust.
“This sort of high-profile activism may benefit state AGs’ political ambitions, but impose harmful costs on consumers, businesses, and the economy,” she said in a statement.
But Stucke said it would be wrong to view antitrust law as solely focused on consumer prices, and that it may be applied to questions of competition and innovation.
The probes could end up with a variety of outcomes including fines, restrictions on conduct or a breakup, Stucke maintained.
“You’d have to show how the remedy would address the concerns,” he said.


Virtual oil summit planned amid ongoing market volatility

Updated 04 April 2020

Virtual oil summit planned amid ongoing market volatility

  • Meeting follows call from Saudi Arabia for urgent meeting and telephone diplomacy between Kingdom, Russia and the US

DUBAI: Leaders of the global oil industry are planning a crucial “virtual” summit next Monday amid ongoing volatility in crude prices and falling energy demand.

The meeting follows a call from Saudi Arabia on Thursday for an urgent meeting and a round of telephone diplomacy last week involving the Kingdom, Russia and the US, as well as meetings between policymakers and oil industry executives.

The summit is expected to involve the 11 members of OPEC as well as other oil producers from the OPEC+ group.

But exactly which countries will take part in the summit was still up in the air last night. 

Russian President Vladimir Putin was holding talks with executives from the country’s major oil companies before deciding whether or not to participate. The Russian leader has previously indicated his willingness to get involved in talks to help resolve the crisis in the global energy industry, but Russia was also the country that refused to take part in a round of deeper production cuts proposed by Saudi Arabia in Vienna last month, sparking the current price war.

In response to that refusal, the Kingdom increased production and lowered its selling prices. On Sunday, Saudi Aramco, which has pushed output to a record 12.3 million barrels per day, is scheduled to announce its “official selling prices” (OSP) for the month of May, expected to show a continuation of the deep levels of discount to attract customers, especially in Asia, in the battle for global market share. 

Brent crude continued its rollercoaster ride on global markets on Friday, dipping nearly 5 percent before hitting a high of 17.5 percent up at $34.91, before paring gains to about $33.

The options for the producers at Monday’s meeting are limited, in the face of an unprecedented drop in global oil demand. By some estimates, more than 20 million barrels of daily demand was lost last month, the biggest ever contraction in oil history.

Saudi Arabia and Russia, which between them produce around 23 million barrels per day, are unlikely to be willing to take all the pain of bigger cuts without an offer from the Americans.

US President Donald Trump tweeted on Thursday that he expected between 10 million and 15 million barrels of oil to be taken out of supply, but he did not specify where this would come from. Meetings were expected to take place at the White House with oil industry executives and policymakers on Friday.

Daniel Yergin, Pulitzer Prize-winning oil expert, said: “The ‘when,’ ‘how’ and ‘who’ of the potential deal remain unclear. And the larger the universe of players the more difficult it will be to implement an agreement.”

OPEC+ consists of the 11 OPEC members, led by Saudi Arabia, plus 10 non-OPEC producers, of which Russia is by far the biggest.

The involvement of the US in the Monday meeting is also unclear. America is not an OPEC member, but US oil executives have attended OPEC deliberations in the past. American participation in any new rounds of output cuts will be constrained by the fact that the US oil industry is made up of private companies — as opposed to state-directed corporations — whose interests diverge.

While big players including Exxon Mobil and Chevron might be willing to take some advice from the White House, the smaller companies in the Texas shale fields are more focused on the immediate financial repercussions of the past month’s volatility.