Big Tech’s Reckoning with Antitrust Has Arrived

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Big Tech’s Reckoning with Antitrust Has Arrived

On February 24, 2021, the Antitrust & Business Regulation Section hosted a panel discussion of the recent government and private actions against large technology companies, with views from regulator, scholar and private practitioner perspectives.  Panelists spoke on parallels drawn from historical high-tech monopoly cases, the current landscape of government actions against Google and Facebook, and predictions regarding litigation in private actions.

The discussion began with a review of critical past cases in the space.  In 1949 and again in 1974, the Department of Justice (DOJ) brought claims against AT&T and/or its subsidiary, Western Electric Company, for monopolization related to telephone services and equipment.  The first case resulted in a consent decree requiring AT&T to license certain patents and limit its business to common carrier communications.  The second case resulted in AT&T divesting its local exchanges, which became “Baby Bells.”  Prior to divestiture, AT&T was the world’s largest privately owned corporation.

The same year AT&T’s divestiture was announced, the DOJ dropped its 13-year antitrust suit against IBM that alleged monopolization of the general-purpose computer market.  The IBM case involved bundled hardware, software, and services.  Then in 1998, the DOJ and several states’ Attorneys General challenged Microsoft’s bundling of personal computer operating systems and internet browsing software.  Following a divestiture ruling for the government and Microsoft’s successful appeal, the case ultimately resulted in a settlement in which Microsoft agreed to refrain from exclusive dealing with PC manufacturers and to share elements of its Windows source code with middleware software developers.

Noting that parallels can be drawn between these past actions against alleged high-tech monopolists and current cases, the discussion shifted to the present government actions against Google and Facebook. In late 2020, the DOJ and several States brough a total of three monopolization cases against Google that have been consolidated for pretrial purposes.  The challenged conduct varies in each action, and includes claims related to the search and search advertising practices on Google’s website, as well as advertisements displayed on third-party websites.

The FTC, as well as several states’ Attorneys General, have brought two antitrust actions against Facebook.  The FTC alleged one count of monopolization of personal social networking under section 2 of the Sherman Act, while the States’ complaint brought both that count and two additional counts under section 7 of the Clayton Act related to Facebook’s acquisition of Instagram and WhatsApp, respectively.  In addition to ongoing enforcement activity, recent efforts to pass applicable legislation, both domestically and abroad, were also discussed.

Acknowledging that litigation against Google and Facebook are early in their respective procedural trajectories, the private action practitioners offered predictions on the likely heady issues in class action litigation. Such litigation is expected to be particularly complex.  For example, discovery will implicate issues such as how confidential evidence may be used across different cases, in both national and international jurisdictions, as well as the management of, and limits on, party and non-party discovery.  Critical elements of antitrust claims, such as market definitions, theories of harm, and quantifying damages, will be hotly contested.

A recurring theme that was visited throughout the discussion was the timing of recent cases, with the overarching question of “Why now?” posed.  While the diverse slate of panelists unsurprisingly did not agree on the relative timeliness and likelihood of success of the current cases, it is undeniable that big tech plays a significant role in our daily lives and this space will be closely watched.

A recording of the CLE program is available at https://bit.ly/3m9GBML

About the Author:

Heather Rankie is Counsel in the Oakland office of Zelle LLP and a member of the Executive Committee of BASF’s Antitrust and Business Regulation Section. The panel was held on February 24, 2021 and included: Professor Randal C. Picker, University of Chicago; Paula Blizzard, California Supervising Deputy Attorney General; Megan E. Jones, Partner, Hausfeld LLP; and Sonal N. Mehta, Partner, Wilmer Cutler Pickering Hale and Dorr LLP.  Katherine Lubin Benson of Lieff Cabraser Heimann & Bernstein, LLP served as the moderator. The views of the author and panelists are their own and are not intended to be legal advice.