New York launches multistate antitrust investigation into Facebook

Facebook denied it has violated antitrust laws and said it welcomed the states' probe. Photo / Getty Images

New York is leading a multistate investigation of Facebook for possible antitrust violations, Attorney General Letitia James announced Friday, kicking off a bipartisan wave of independent state inquiries targeting the social media giant as well as Google's parent company, Alphabet.

James will work with the attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia on an inquiry focused on "Facebook's dominance in the industry and the potential anti-competitive conduct stemming from that dominance," according to a news release.

"Even the largest social media platform in the world must follow the law and respect consumers. I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk," James said in a news release. "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."

The Post previously reported that more than half the nation's attorneys general are readying an investigation of Google, but it was unclear whether other tech giants such as Amazon would find themselves in the coalition's crosshairs (Amazon CEO Jeff Bezos owns The Washington Post). The coalition of state attorneys general will formally announce the multi-state investigative effort Monday in Washington.

Facebook denied it has violated antitrust laws and said it welcomed the states' probe.

"People have multiple choices for every one of the services we provide," Will Castlberry, Facebook's vice president of state and local policy, said in a statement. "We understand that if we stop innovating, people can easily leave our platform. This underscores the competition we face, not only in the US but around the globe."

Castleberry pledged to "work constructively with the attorneys general and we welcome a conversation with policymakers about the competitive environment in which we operate."

Regulators around the country in recent months have signaled growing concern about the breadth of Silicon Valley's power, questioning the industry's access to vast amounts of users' personal data and expressing concern that the huge profits that Facebook and Google generate allow those companies to buy up potential rivals and maintain their dominance - to the detriment of consumers.

Two federal antitrust agencies have opened probes targeting the industry broadly, while lawmakers in Congress have grilled executives from Amazon, Apple, Facebook and Google about their business practices. But it remains to be seen whether the investigations will stick to some of the world's most powerful companies.

"We believe that a broad movement to break up companies solely because they are large will fail without a change to existing antitrust laws," Dan Ives, an analyst with Wedbush Securities, wrote in a note to investors Friday. "The 'too big, must be broken up' argument is a more difficult one to make in our opinion as current antitrust law does not provide for a forced breakup solely due to the size of the business; if it did, Walmart would have been broken up decades ago."

In July, Facebook paid US$5 billion ($7.8b) and agreed to submit to significant federal oversight of its business practices to settle Federal Trade Commission allegations that the company had repeatedly deceived its users about how and who was accessing their personal data. The fine was the largest in history for a privacy violation, but only a fraction of the US$55.8b in revenue Facebook took in in 2018.

For Google, the states' heightened interest comes about six years after the US government formally studied the tech giant's search-and-advertising business but opted against slapping it with significant penalties. The inaction in the United States stands in stark contrast with the European Union, which has issued a series of multibillion-dollar fines for the way Google displays search results and manages its Android smartphone operating system.