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The United States of Amazon . . . In Google We Trust

When I was in law school I had the opportunity to clerk at the Department of Justice (“DOJ”).  It was an amazing once in a lifetime opportunity.  Back then, DOJ, in my humble opinion, was awe-inspiring, the sine qua non of the legal profession, the tip of the legal spear.  

I had the privilege of working with a small, dedicated group of attorneys and historians that formed the now defunct Office of Special Investigations or “OSI.”  The sole purpose of that group was to investigate and prosecute Nazi war criminals residing in the United States.  

It wasn’t like the TV show Hunters with Al Pacino, and admittedly there wasn’t a whole lot of future in deporting Nazi war criminals (most were in their 80’s) but it was still heady stuff.  I had the sobering honor of attending depositions of Holocaust survivors and helping the team deport former Waffen SS guards who hid their Nazi past in order to illegally enter the United States years ago. 

However, as exceptional as OSI was, the Antitrust Section was even more universally revered.  At that time, everyone knew that the brightest minds of DOJ were in the Antitrust Division.  

Created by Woodrow Wilson in 1919, the Antitrust Division is the team that famously broke Ma Bell into baby bells in United States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982); see also https://www.justice.gov/atr/history-antitrust-division.  

The Antitrust Division has a long storied history and a reputation of being tough as nails attorneys that aren’t afraid to stand up for consumers and go after the big guys – for example, Standard Oil in 1906 (Standard Oil Co. v. United States, 221 U.S. 1 (1911)); Aluminum Company of America (Alcoa) in 1937 (United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945)); Ford Motor Company in 1961 (https://www.justice.gov/atr/case/us-v-ford-motor-company-and-electric-autolite-company); and International Business Machines in 1969 (United States v. Int’l Bus. Machs. Corp., 60 F.R.D. 654 (S.D.N.Y. 1973)).

In 2001, the Antitrust Division pursued one of its most famous cases in an effort to break up Microsoft. See United States v. Microsoft Corp., 346 U.S. App. D.C. 330, 253 F.3d 34 (2001).  DOJ won a preliminary victory in 2000 but was reversed on appeal and ultimately settled with Microsoft intact.

After the Microsoft case in 2001, we heard less and less about the Antitrust Division.  

On paper, they always looked busy.  See the partial workload statistics below, full numbers available at https://www.justice.gov/atr/file/788426/download

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And, given the ample budget and staffing of the Antitrust Division, one would expect continued greatness.  

Between 2000 and 2016 the Antitrust Division’s budget increased from 110 million to over 164 million.  https://www.justice.gov/atr/appropriation-figures-antitrust-division

By 2019, the Antitrust Division had 335 attorneys. 

https://www.justice.gov/doj/page/file/1246781/download#:~:text=The%20mission%20of%20the%20Antitrust,over%20the%20FY%202020%20Enacted.  

By comparison, in 2019, one of the most successful firms in the world, Wachtell, Lipton, Rosen & Katz, had only 265 attorneys, and firm revenues of $882,086,000.  https://en.wikipedia.org/wiki/List_of_largest_law_firms_by_revenue  

But, after 2000, even as the budget of the Antitrust Division increased, its impact seemingly diminished.

Even the greatest “victories” out of the Antitrust Division hardly made headlines and invariably involved smaller companies.  For example, one of the Division’s most heralded lawsuits forced consumer review website Bazaarvoice, Inc. to undo a 2012 merger with rival PowerReviews in 2014.  United States v. Bazaarvoice, Inc., 2013 U.S. Dist. LEXIS 101454 (N.D. Cal. 2013).  Never heard of either one?  You aren’t alone.  

More egregiously, corporate Goliaths, like Amazon, Facebook and Google, grew larger and larger, apparently unchallenged.  I started wondering where was the Antitrust Division of the past that I respected?  

In fairness, without further analysis, I can’t say whether any or all of these individual mergers violated antitrust law, but I can say that the lack of any visible involvement by the Antitrust Division as these conglomerates continued to gobble up competitors one by one should be deeply troubling to all of us.  

It’s as if the Antitrust Division took a twenty-year nap on America’s dime. 

I wasn’t the only one to notice.  In 2018, Fordham Law Professor Zephyr Teachour, and author of the book Break ’em Up, wrote: 

America is getting crushed by big, unresponsive, powerful corporate monopolies, the modern version of the trusts of the gilded age. This isn’t happening organically, but through mergers. We should . . . stop these modern Goliaths from crushing our democracy. . . . These mergers hurt everyone except for the CEOs and the investors who make money off of monopolistic prices. . . . .  It hurts the small and medium-sized business owners that are the vibrant, innovative heart of a thriving democracy. It also hurts our democracy: these companies are like little fiefdoms, spending millions in politics to buy silence from lawmakers. . . . The federal government has shown little willingness to stand up to corporate monopolies, and use its powers under the existing antitrust statutes . . . . mergers come with big promises, and leave us with crappy service and big CEO payouts.

https://www.theguardian.com/commentisfree/2018/jun/13/mega-mergers-att-time-warner-crush-american-democracy  

But, just as many had given up on the Antitrust Division, it came roaring back to life, filing a series of blockbuster antitrust suits in the past year.  

In its biggest lawsuit in 20 years, the Antitrust Division filed suit against Google on October 20, 2020, alleging that Google’s deals with Android smartphone manufacturers, Apple, and third-party browsers to make Google Search their default general search engine are anticompetitive, harming consumers by denying Google’s competitors the scale and data they need to compete. https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws.  

Then, on January 5, 2021, DOJ brought the first criminal “No Poach” and “Wage-Fixing” antitrust prosecutions, making good on a promise to criminally charge companies that agree not to solicit each other’s employees in so-called “no poach” agreements or that agree not to compete on wages or salaries in so-called “wage-fixing” agreements. https://www.justice.gov/opa/press-release/file/1351266/download

And, on January 12, 2021, DOJ announced that Visa Inc. and Plaid Inc. have abandoned their planned $5.3 billion merger following a civil antitrust lawsuit filed by the Antitrust Division on November 5, 2020.  https://www.justice.gov/opa/pr/visa-and-plaid-abandon-merger-after-antitrust-division-s-suit-block.

More cases could be coming. The Antitrust Division is reportedly investigating Apple Inc. over its App Store practices, Bloomberg has reported. https://www.bloomberg.com/news/articles/2020-06-26/apple-s-app-store-rules-scrutinized-in-u-s-antitrust-probe  And, Facebook Inc. disclosed in 2019 that the DOJ is investigating the company in addition to the FTC, which sued Facebook in December.  https://www.bloomberg.com/news/articles/2020-12-09/facebook-sued-by-u-s-states-in-antitrust-case-ftc-says-kihu8t8l  

What comes next with the ongoing DOJ investigations will depend on the Biden administration which is inheriting these matters.  The Google case is not expected to go to trial until 2023.  https://www.bloomberg.com/news/articles/2021-01-13/tech-scrutiny-to-continue-under-biden-doj-antitrust-chief-says.  

The head of the Antitrust Division during the Trump administration, Makan Delrahim, resigned and departed on January 19, 2021, the day before the election.  https://www.law360.com/articles/1344364/delrahim-stepping-down-as-doj-antitrust-head.  However, Mr. Delrahim had already recused himself from DOJ’s investigation into Google due to conflicts. https://www.theverge.com/2020/2/4/21122041/google-inquiry-department-of-justice-makan-delrahim-conflict-of-interest-lobbying.  His permanent replacement has not yet been appointed.  https://www.justice.gov/atr

Some speculate that the recent social media bans enacted by Twitter, Facebook, Amazon and others against President Trump and conservative platforms was an attempt to curry favor with a Biden administration because “BIG TECH [is] staring down the barrel of the one gun it has always feared — federal antitrust enforcement.” https://theintercept.com/2021/01/13/big-tech-antitrust-biden-ftc/

The good news is that recent polls indicate bipartisan support for regulatory action against Big Tech monopolies.  https://www.axios.com/exclusive-poll-shows-bipartisan-support-for-tech-antitrust-action-c3794ff5-120d-44d8-bac1-58b033efbd8a.html

Moreover, several state attorneys’ generals have joined the Google lawsuit and two additional antitrust lawsuits have been brought against Google by coalitions of state attorneys’ generals.  

https://sanfrancisco.cbslocal.com/2020/12/17/google-antitrust-lawsuit-36-states/

Given the bipartisan support and ongoing state involvement, hopefully, the Antitrust Division won’t go back to sleep.  

In the words of Al Franken – 

Antitrust law isn’t about protecting competing businesses from each other, it’s about protecting competition itself on behalf of the public. 

Most Americans don’t think about antitrust law when they look at their cable bill, flip channels on TV, or worry about what their favorite website knows about them.

 

But they should.

If you have ay questions about this article, please contact Alison Feehan (afeehan@setlifflaw.com) at 804-377-1279 or Steve Setliff (ssetliff@setlifflaw.com) at 804-377-1261.

 

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