State AGs Ask Feds to Crack Down on Monopolistic Big Tech

This photo combo of images shows, clockwise, from upper left: a Google sign at a store in Hialeah, Fla., the Twitter app displayed on a smartphone, PayPal headquarters in San Jose, Calif., and the Facebook app displayed on an iPad. (AP Photo)

(CN) – When U.S. Senator and presidential hopeful Elizabeth Warren gave a speech during a campaign stop in San Francisco, one of the lines that received the most applause was “We will break up Big Tech.” Perhaps surprising since San Francisco and the nearby Silicon Valley are home to tech giants like Google, Facebook and Apple.

If those companies were tempted to shrug off Warren’s line as campaign rhetoric, they will surely take note after 43 state attorneys general submitted a letter to the Federal Trade Commission demanding policies to introduce more competition and accountability into the digital economy.

“We can’t rely on the free market to provide the type of competitive field that antitrust law is supposed to protect,” said Nebraska Attorney General Doug Pederson at a hearing hosted by the FTC in Omaha, Nebraska, on Wednesday. “There is a point and time when government has to step in and say we are going to protect competition.”

Pederson made it clear he believes the time is now.

The attorney general said the digital economy represents the fourth industrial revolution, with personal data the oil that powers the economy. But as Facebook, Google and other mine personal data, they do so in an increasingly opaque manner without justly compensating consumers.

“Tech platforms will try and convince that users agree to the terms of service,” said Herbert Slatterly, attorney general of Tennessee. “But don’t get talked into believing that’s full disclosure or informed consent. It is neither.”

Slatterly also said the consolidation of data mining power into a few large companies has created barriers for small companies to challenge large tech platforms preventing the introduction of more competition to benefit consumers.

“The barriers are too high and it should be looked at,” he said. “The lack of competition is bad for the consumer and bad for America.”

Both Slattery and Pederson said they will continue to encourage the FTC to look at provisions designed to increase transparency regarding use of personal data while asking the agency to look at whether companies such as Google and Facebook are simply too monopolistic.

“Structural change by the government may well be necessary,” Slatterly said.

The AGs also signaled they would like more scrutiny of mergers and acquisitions by large tech companies. Pederson said Facebook’s acquisition of Instagram and Google’s purchase of YouTube would be looked at totally different in today’s regulatory environment, adding the pace of growth in the tech industry initially outflanked regulation.

“Acquiring young companies are classic anticompetitive moves,” Slatterly said. “Also, entrepreneurs are building companies to sell to Facebook and Google, not to build to scale.”

The attorneys general called for the FTC to implement a policy that would explore each new acquisition made by Big Tech companies and assess them for anticompetitive elements.

Louisiana Attorney General Jeff Landry did not pull any punches in his assessment of the threat Big Tech poses to a healthy economy and country.

“When corporate power becomes more powerful than government power these companies become more powerful than the government itself,” Landry said.

The three attorneys general who discussed consumer protection and competition in the digital sector in Omaha on Wednesday come from red states, which typically have a pro-business posture and a hostile attitude toward government regulation.

But Pederson said the nature of the problem and its potential solutions are largely bipartisan.

“Forty-three AGs signed onto this letter, so it’s a broad-based and bipartisan concern and the industry needs to recognize this,” he said.

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