An antitrust probe of Alphabet appears to be entering a new phase.
A consortium of state attorneys general will meet with DOJ officials next week to share information on their respective investigations of the tech giant, the WSJ reported. It could signal the two entities marshaling resources to probe whether or not Alphabet’s business practices include anticompetitive conduct. Shares of Alphabet were down 2.4% on Monday to $1,431.73, bringing the search giant's market cap below $1 trillion after it first surpassed that level two weeks ago.
“I suspect that there will be a lot more cooperation going forward...to me, this shows the investigation isn’t going away,” said Aaron Sheanin, a partner at Robins Kaplan LLP who specializes in antitrust matters. According to Sheanin, the news of collaboration between state AGs and the DOJ is reminiscent of the U.S. government’s 1998 antitrust case against Microsoft (MSFT) - Get Report. That lawsuit began with the DOJ and a group of state attorneys general suing the tech giant for illegally freezing out competitors in software.
In Alphabet's case, the state AGs and the DOJ have been conducting separate investigations since last year, and have focused on Alphabet’s dominance in online search and advertising, as well as its Android mobile operating system. Alphabet (GOOGL) - Get Report confirmed the existence of the DOJ probe in September 2019.
It isn’t the first time Alphabet has faced an antitrust review: In 2011, for example, the FTC launched an investigation into whether Google unfairly demoted the search results of competitors. That matter was settled with a few tweaks to Google’s business model. But Google’s business model has evolved dramatically since then, encompassing the world’s top search engine, the top mobile OS, the top email and mapping services, among many other leading Internet services.
The political environment has also changed, with a number of regulators, government officials and individual politicians, such as Sen. Elizabeth Warren, calling for tighter oversight of Big Tech.
The DOJ’s investigation of Alphabet has been ongoing since at least last summer, when the agency formally acknowledged a probe of “market-leading online platforms,” presumed to also include Facebook (FB) - Get Report, Amazon (AMZN) - Get Report and Apple (AAPL) - Get Report. Alphabet says it plans to cooperate with the investigations.
According to the WSJ, the meeting among the DOJ officials and state AGs next week marks the first time they will have shared information, and is viewed as the beginning of a dialogue that could lead to the two groups joining forces.
Sheanin added that the collaboration suggests broader political momentum for challenging the market power of big tech firms. Investigators may be feeling the pressure to move quickly.
“It indicates a strong political will, on behalf of the states broadly as well as the federal government, to try to take on a major dominant player or players in a market,” Sheanin said.
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