The Federal Trade Commission and Department of Justice have started investigations into the world’s largest tech giants.
And recently, the FTC launched the Technology Task Force (TTF), which the commission says will monitor competition in U.S. tech markets, investigate alleged anticompetitive conduct, and initiate enforcement actions if warranted.
In Part 1 of this two-part series, we answered five key questions about the task force. Here, we answer five more questions and look at where its work is likely to lead.
What’s the Timeframe for the TTF to Starting Bringing Enforcement Actions?
The complex antitrust issues raised by digital technologies, platform markets, and big data dynamics, mean that, despite the fanfare, any TTF enforcement actions are likely many months—if not years—away. The TTF appears to be in the early stages of its investigations. These investigations are challenging and generally take a long time—often a year or two at a minimum—before the agency even decides whether to bring an enforcement action, let alone for a court to decide a case and any appeals to conclude. For example, the DOJ’s Microsoft case took five years from the start of the investigation until it settled, and litigation on the settlement continued for another three years.
Will the TTF’s Work Be Public and Will It Publish Its Work Product?
Like all FTC investigations, TTF investigations will be confidential. The agency likely won’t announce investigations (unless the subject of the investigation does so first) or publish any kind of report before bringing an enforcement action. But leaks and disclosure of TTF activities incidental to investigations are already occurring.
Moreover, TTF investigations will likely involve extensive document productions, interviews, and possibly depositions of investigation targets and industry participants. So industry participants contacted by the TTF will have a sense of what the TTF is investigating and could reveal that information. Indeed, recent press reports indicate that retailers have received civil investigation demands or subpoenas from the FTC for information relating to their online marketplace sales.
Are the FTC’s Competition Hearings Relevant to the TTF’s Work?
Yes. Separately, the FTC concluded a series of competition and consumer protection hearings, many of which focused on tech-related issues. The FTC’s Director of the Office of Policy Planning, Bilal Sayyed, recently revealed that his office’s “highest priority” now is to release a guide for the application of antitrust laws to tech company conduct. Sayyed characterized this as “an enforcement document” that is “intended to support the [FTC’s] immediate and long-term enforcement.” This document would give the TTF an analytical framework to use in investigations and enforcement actions. He also said that they plan to update the commentary to the FTC-DOJ Horizontal Merger Guidelines to address the elimination of nascent or potential competition, acquisitions where data is a key asset or input, and other topics.
Is the TTF Definitively Going to Bring Cases Against Tech Firms for All the Areas of Anti-Competitive Concern?
In public statements, FTC Bureau of Competition Director Bruce Hoffman and TTF head Patricia Galvan have been careful to explain that solid data and an economic theory are needed for a case, and the evidence may not support certain theories of harm.
- In a speech about algorithms and AI, Hoffman said that the FTC wants “to determine whether these technologies are likely to sharpen competition, reduce competition, do both, or do neither... . We want to be very careful not to regulate or enforce without [an] empirical, fact-based, theoretical framework.”
- Regarding “killer acquisitions,” Hoffman said that he was “not aware of good economic evidence that there is a unique and widespread ‘nascent’ or ‘start-up’ acquisition issue in the tech industry.”
- In regard to whether exclusive access to huge stores of data could be an antitrust violation, senior FTC officials caution that there may be legitimate justifications for not permitting access to data (e.g., privacy).
Additionally, practical considerations make any TTF enforcement action particularly challenging. Many markets likely to be implicated involve products and services that are free, at least monetarily, to consumers. While critics argue that consumers pay a “price” in turning over their data and privacy—and there may be certain customers (e.g., advertisers) who do pay a monetary price—proving non-price harms in an antitrust case is harder than proving price harm.
And the TTF will need to weigh any benefits to vast numbers of non-paying consumers against any harm to paying customers. While the antitrust agencies regularly allege non-price harm in their cases, there is no recent case in which the agencies have alleged solely non-price harm.
Is the TTF Just Window Dressing for the FTC to Appear Like It’s Doing Something?
It would be a mistake to underestimate the significance and potential effect of the TTF for at least four reasons:
- The FTC has limited resources; it would not create a 17-person task force—drawn largely from busy and already leanly staffed divisions at the FTC—simply to read law review articles and draft “think pieces” or otherwise pretend to be doing something.
- Serious antitrust enforcers are behind, and involved in, the TTF. This includes current FTC Chair Joe Simons, a highly regarded enforcer whose prior stint as FTC Bureau of Competition director was a period of active and aggressive antitrust enforcement; current BC Director Hoffman, an experienced practitioner and deep antitrust thinker; TTF head Galvan, a thoughtful and veteran enforcer; and TTF deputy Cerilli, whose analytical and litigation skills have quickly propelled her through the ranks at the FTC from staff attorney, to counsel to the bureau director, to deputy assistant director of the TTF.
- Precedent suggests the TTF is intended to, and will, have an impact. As noted in Part 1, the TTF is modeled on the Merger Litigation Task Force, which turned into a full-fledged division that became one of the most active and aggressive divisions at the FTC.
- The FTC and TTF are in the spotlight, and antitrust tech issues are in focus like never before. There is significant pressure for the FTC and TTF to act.
Though many questions remain unanswered, recent developments tell us much. The FTC’s TTF is a serious effort that has already resulted in intensified scrutiny of antitrust issues in the tech industry.
While there is no guarantee that the evidence will exist for it to bring cases that will satisfy tech critics, the TTF will play a major role in antitrust enforcement in the tech industry in the coming years.
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.