Yichuan Cao/Sipa via AP Images
The antitrust authorities, roused after a decades-long slumber, sorted out jurisdictional issues on the dominant technology platforms last week, with the Justice Department taking Google and Apple, and the Federal Trade Commission (FTC) taking Facebook and Amazon. There wouldn’t be any reason for the agencies to determine who handles what if they weren’t ramping up investigations. Companies harmed by Big Tech are assembling their complaints, lawmakers in both parties are demanding action, and we could very well have the biggest monopolization case in America since the legal fight against Microsoft during the Clinton administration.
This newly vigorous enforcement throws into sharp relief the failures of the past, and actually the failures of one pivotal year: 2012. There could have been credible antitrust investigations that year of both Big Tech companies that are now squarely in the government's sights: Google and Facebook. In both cases, the FTC had demonstrable evidence of anti-competitive conduct. Lower-level FTC officials, in the case of Google, even recommended a lawsuit. But the FTC—President Obama's hand-picked regulators at the FTC, I should add—chose to remain silent.
The failure to prosecute reveals the shortcomings of a government that was too close to Silicon Valley, enabling a dominant set of monopolists to entrench themselves. Belatedly, the antitrust agencies are only now making noises about taking action. The lessons of 2012 are too clear for them to take a pass again.
We know a lot about the Google case because the FTC inadvertently sent The Wall Street Journal a confidential staff report in response to a Freedom of Information Act request. The report from the agency’s Bureau of Competition, dated August 8, 2012, made an extensive case for indicting Google for exploiting its monopoly power.
Officials concluded that Google illegally “scraped” other websites for reviews and other information and passed off the content as its own; threatened to remove sites from its search engine if it couldn't scrape their content; barred advertisers from using data obtained from Google ad campaigns for ads on other search engines; stopped websites using its search results from doing business with rivals like Bing or Yahoo; and caused “significant harm” to websites by favoring its own shopping, travel, and local content in searches. The report didn't recommend a lawsuit on one of those counts—preferring its own content in search—but did accuse Google of violating antitrust laws in the other areas.
Google has been fined billions of dollars for harms of this nature by the European Union. But the five-member commission overruled the recommendations of its own staff, choosing not to move forward in January 2013, after Google agreed voluntarily to change some of its business practices.
The vote was unanimous to close the case, but only after Google's voluntary changes. Edith Ramirez, then a commissioner on the FTC and later the chair, told a Senate committee afterward that a majority of commissioners didn’t support a case. In the FTC commissioners’ statement following the Google investigation, a footnote suggests that Ramirez was the swing vote, because she did not share the other Democratic commissioners’ concerns about Google restricting advertisers from doing business with rival search engines.
Ramirez has strolled back and forth through the revolving door in her career, from representing corporate clients at the law firm of Quinn Emanuel Urquhart & Sullivan, to the FTC, and back to representing corporate clients at Hogan Lovells.
Facebook also could have been slowed down in 2012, particularly in regard to its purchase of rival social media site Instagram. The FTC had the ability to file a lawsuit to block that merger, and considered doing so. During the investigation, the agency uncovered a document written by a high-level Facebook executive (no name is given). According to the New York Post, the executive said bluntly that Facebook was buying Instagram to eliminate a competitor. One source called it a “spectacular” document.
But Jon Leibowitz, the FTC chair, “couldn't generate enough support from his fellow commissioners” to sue to block the merger, according to the Post, despite what amounts to smoking-gun evidence that Facebook was buying out a rival to prevent competition. The deal would eventually get FTC approval in August 2012—the same month that the Bureau of Competition released its report recommending a lawsuit against Google.
The way the Post described the situation again seems to single out Ramirez. Julie Brill, the other Democratic commissioner, was seen as more aggressive in pursuing antitrust issues at the time.
But the Obama administration as a whole was not really one to rankle its friends in Silicon Valley. As I detailed in a report for The Intercept in 2016, Google representatives attended White House meetings more than once a week, on average, during the Obama presidency, and nearly 250 people moved from government service into Google’s employment, or vice versa, during Obama’s tenure. The Google/Obama White House meetings grew more frequent while Google was under FTC investigation, and minutes before the FTC’s final decision, a White House official solicited Google for talking points about the matter.
Obama personally met with Mark Zuckerberg on several occasions, including at a Facebook town hall. Obama’s campaign team used Facebook extensively in the 2012 election, including using the type of data mining now decried after the Cambridge Analytica scandal.
Today, the FTC is prowling around Silicon Valley, seeking informationon the two companies it’s charged with investigating, Amazon and Facebook. But seven years ago, it had an opportunity to address what even then we could identify as growing monopoly power by two leading tech giants. Through lawsuits and discovery we could have learned much more, well before the 2016 election, about how these businesses operated. We could have stopped their continued purchases of rival companies and cast a skeptical eye on mergers in the entire tech space, which continue unabated (Google just bought a data analytics firm last week).
Enforcement cases in an age where the judiciary has been polluted with Chicago school theories of antitrust would have been a tough road, especially considering the tech industry's army of lobbyists and influencers. But as antitrust attorney Gary Reback said about the Microsoft antitrust case in the 1990s, the trial is the remedy. It could have created a completely different environment around the regulatory posture, and prodded Big Tech to step more gingerly. It could have created space for innovators to challenge platform dominance, the way Google did in the wake of the Microsoft trial.
But choices were made in 2012. Specific choices, by conflicted regulators and an administration dazzled by Big Tech. These choices had weight; they created an impenetrable set of giants now hanging over our economy. Now we can only wonder what might have been, and what we lost in the process.
