Following calls for increased antitrust enforcement against “big tech,” the Federal Trade Commission and Department of Justice have begun investigations into the world’s largest tech giants. At the FTC, the agency’s recently launched Technology Task Force (TTF) will lead its efforts.
Below are five questions about the TTF.
What Is the TTF?
The FTC’s 17-person TTF is “dedicated to monitoring competition in U.S. technology markets, investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted.” In short, it’s the legal team that will lead most FTC investigations in the tech industry.
The TTF was modeled on the FTC’s Merger Litigation Task Force, which was launched in 2002 to re-invigorate the agency’s hospital-merger enforcement and ultimately evolved into one of the most active FTC divisions, Mergers IV.
Who Leads the TTF and Who’s on It?
The TTF is led by Assistant Director Patricia Galvan, a 20-year FTC veteran and former deputy assistant director in the FTC’s Mergers III Division, which has reviewed some tech-related mergers such as Zillow/Trulia.
Galvan’s deputy is Krisha Cerilli, a former counsel to the FTC’s Bureau of Competition director and a five-year FTC veteran. Cerilli has previously been involved in several high profile FTC matters.
The rest of the TTF consists of 13 lawyers drawn from the other shops in the Bureau of Competition; the TTF is also adding an IP lawyer and a “tech fellow.” One-third of the TTF attorneys (including Cerilli) come from the FTC’s Mergers IV Division, which has reviewed mergers of online retailers and challenged the DraftKings/FanDuel merger, which involved online and app-based daily fantasy sports contests.
What Will Be the Scope of the TTF’s Investigations?
The FTC says the “primary focus of the TTF is to identify and investigate anti-competitive conduct and consummated mergers in markets in which digital technology is an important dimension of competition, such as online platforms, digital advertising, social networking, software, operating systems, and streaming services.”
Galvan and FTC Bureau of Competition Director Bruce Hoffman have emphasized that the TTF will have a broad focus and named three potential areas of focus:
- “Killer acquisitions” in which large, incumbent firms acquire small, nascent rivals that might, critics allege, otherwise become significant competitors absent the acquisition;
- Platform self-preferencing through which large platforms allegedly favor their own products and services on the platform and demote rival products on their platform; and
- Exclusionary data practices, which could explore whether the largest tech firms with the most and best data can exclude competitors from meaningfully competing by refusing to share data.
Foreign antitrust investigations and enforcement actions, private lawsuits, and congressional hearings involving tech companies indicate other areas the TTF is likely to investigate:
- Dual-Distribution: Tech critics are concerned about online platforms’ role as both platforms selling third parties’ goods and as competitors selling their own-brand goods on their platforms. Critics claim that these platforms collect data about third parties’ products and sales on their platform and unfairly use the data to launch their own branded products.
- Predatory Pricing: This is an established antitrust theory of harm, albeit one that is difficult to prove, that posits that e-commerce retailers’ prices are so low that then drive competitors from the market and will eventually lead to higher prices.
- Privacy: Earlier this year, the German Federal Cartel Office based an antitrust case on privacy terms and conditions and how social media users’ data were managed. Although a German court recently overturned that decision, and it would be a novel theory under U.S. antitrust law, the TTF could explore privacy practices as an antitrust violation or consider whether technological or contractual restrictions on user-data portability and social media platform interoperability can impede competition.
How Will the TTF Identify Investigation Targets?
The FTC has openly invited the public to notify it about conduct that it should consider investigating. One news outlet reported that top FTC officials, including TTF leadership, went to Silicon Valley and privately met with “more than a dozen industry players to discuss the state of their businesses and market competition challenges.”
Other reports indicate that professors and a founder of Facebook met with the FTC to lay out a potential antitrust case against the company. And as noted above, foreign antitrust enforcement, private litigation, and congressional hearings suggest likely TTF targets, as may emerging state attorneys general investigations.
Has the TTF Actually Started Any Investigations?
Yes. For example, Facebook recently revealed that the FTC is investigating the company “in the areas of social networking or social media services, digital advertising, and/or mobile or online applications.” This is in line with remarks by Bureau of Competition Director Hoffman that the TTF was “beginning investigations and also conducting extensive general fact-gathering.”
Consistent with established practice, however, the FTC has neither confirmed—and likely will not confirm—the exact subject of the Facebook investigation, nor the subjects of any other investigations.
While Hoffman has suggested that press articles reporting that the FTC and DOJ had agreed that the FTC would investigate Facebook and Amazon, and the DOJ would investigate Google and Apple, are inaccurate—and, indeed, such a categorical split would be unusual— subsequent reports suggest that the agencies have opened investigations breaking down along these lines.
While the TTF’s work to date is largely unseen and nonpublic, initial observations tell us quite a bit. Thus far, key takeaways include:
- Statements from TTF leaders, Bureau of Competition management, and FTC commissioners indicate some specifics as to where the TTF is generally focusing.
- Foreign competition enforcement, private litigation, congressional hearings, and state AG investigations are also good indicators of areas—and specific theories of antitrust harm—the TTF is likely to explore.
- The TTF is well staffed and its ambit is broad, meaning its investigations are likely to be thorough, wide-ranging, and lengthy.
- The biggest tech firms are clearly the initial and primary subjects of the TTF’s scrutiny of potential antitrust issues in the tech industry, but may not be the sole focus. The TTF’s scrutiny adds to those of other competition enforcers around the global, which is only increasing.
In Part 2 of this series, we will look ahead at what we may see from TTF investigations, including whether the TTF is likely to bring suits against tech firms, and what potential challenges it may face in doing so.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Alexis J. Gilman is a partner in Crowell & Moring LLP’s Antitrust Group. From 2010-2017, he worked at the FTC, including three years as the head, and two years as a deputy, of the Mergers IV Division, where he supervised and worked on high-profile investigations and litigation.
Akhil Sheth is an associate in Crowell’s Antitrust and Commercial Litigation Groups, who represents technology, healthcare, and others clients across a range of antitrust and other disputes.