New York AG Launches Antitrust Probe Into Facebook: What Could Happen?

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Friday saw a new regulatory front open up against Facebook (FB) - Get Report , as New York State attorney general Letitia James announced that her office, in conjunction with eight other attorneys general, is opening an investigation into whether the company has violated antitrust regulations.

This follows a report in the Washington Post earlier this week that more than half of States attorneys general will announce an investigation next week into Alphabet's (GOOGL) - Get Report Google on similar grounds.

At least one Wall Street observer thinks the actions are "toothless." Michael Pachter, who follows Facebook for Wedbush Securities, says governments will have a hard time showing consumer harm because Facebook doesn't charge money. As a result, it can't be shown to be unfairly raising prices on consumers, the usual criterion for antitrust action.

Governments could find that Facebook's control of the internet ad market harms consumers in some way, but that would be hard to impose given that it's federal rules that govern interstate commerce, says Pachter.

One thing seems certain: regulatory scrutiny is a "new normal," which means high legal bills for Facebook and peers for the foreseeable future.

Facebook and Alphabet are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

Tiernan Ray neither trades nor owns shares of any companies discussed in the video. 

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