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Facebook, Google Face Antitrust Probes: What You Need to Know

Facebook on a smartphone and a MacBook at the same time.
(Image credit: Alexey Boldin/Shutterstock)

Updated Monday, Sept. 9, 2019 with official announcement of Google antitrust investigation. This story was originally published Sept. 6, 2019.

Attorneys general of eight states and the District of Columbia Friday (Sept. 6) launched an antitrust investigation into Facebook. On Monday, a different group of about 30 state attorneys general are expected to launch a separate antitrust probe into Google.

"Even the largest social-media platform in the world must follow the law and respect consumers," announced New York Attorney General Letitia James, who is leading the Facebook probe. 

"I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk," James added. 

"We will use every investigative tool at our disposal to determine whether Facebook's actions may have endangered consumer data, reduced the quality of consumers' choices or increased the price of advertising."

MORE: How to Stop Facebook From Sharing Your Data

The Google probe is not yet official, but The Wall Street Journal reported today that it would be led by Texas Attorney General Ken Paxton and examine Google's dominance of the digital-advertising market and how consumers' data privacy and choice might be affected. Some states are expected to be part of both efforts.

[UPDATE Sept. 9: The Google probe, announced Sept. 9, involves 50 states and territories, including the District of Columbia. Of the states, only Alabama and California are sitting it out. 

Flanked by 11 other state attorneys general, Paxton announced the investigation on the steps of the U.S. Supreme Court Monday afternoon. He said that for the moment, the probe would focus on the online-advertising market and would not necessarily lead to litigation.

"But the facts will lead where the facts lead," Paxton said, according to The Wall Street Journal.

"When most Americans think of the internet, they no doubt think of Google," Paxton said in a statement posted online by his office

"There is nothing wrong with a business becoming the biggest game in town if it does so through free-market competition, but we have seen evidence that Google's business practices may have undermined consumer choice, stifled innovation, violated users' privacy and put Google in control of the flow and dissemination of online information."]

For now, these state-led investigations are separate from federal antitrust probes into Apple, Amazon, Facebook and Google launched earlier this summer by the Department of Justice and the Federal Trade Commission. But the WSJ said the state AGs have already met with the federal teams about the issue.

So what does this all mean for you? 

The short answer is that we don't know yet. The possible results range from no change at all, which would be optimal for both companies, to court-ordered breakups of Facebook and Google. 

Will this be Microsoft, or AT&T?

There are precedents for both outcomes. In the late 1990s, federal and state authorities conducted a huge antitrust probe into Microsoft that threatened to break up the company, which then dominated the computer-software industry. But the case fizzled out after years of effort, and the only long-lasting effect was that Internet Explorer was eclipsed by Google Chrome as the top web browser.

Much more effective was the federal government's antitrust case against AT&T, which took nearly 10 years to litigate but in 1984 broke the Bell System into eight different telecommunications companies. 

Those eight companies have since been reconsolidated into three, but no single company has since had the kind of industry dominance that AT&T had over the U.S. telephone system for the first century of its existence.

Are Facebook and Google really monopolies?

The Microsoft and AT&T probes were well-founded antitrust cases. By contrast, it's not clear what exactly today's state attorneys general are looking for. 

The Facebook probe is theoretically looking for antitrust violations, yet the press statement mentions consumer privacy and safety, which seem like different concerns. The Google probe coming Monday sounds similarly wide-ranging and unfocused.

The Facebook-probe announcement does mention ad rates and consumer choice, but those are not crowd-pleasing issues. No one has to pay Google or Facebook when they turn on a computer. By contrast, you had to pay AT&T to even just own a phone before the mid-1980s.

You could argue, and the state AGs doubtless will, that Google's dominance of web search comes close to AT&T's monopoly. Google is also the biggest player in the online-ad market, but it's got a lot of competition there from Facebook and many other companies.

Likewise, Facebook is so dominant in social media that it's practically a utility. But it's hard to argue that it is enforcing a monopoly when plenty of other companies -- Google, Microsoft and even Apple -- have tried to come straight at it with their own social networks. They've just not been as successful.

Casting a wide net

What is clear is that the state AGs think going up against Big Tech is a winning issue with the public. They may be casting a wide net in order to find something they can nail Google and Facebook on, but they probably won't lose any votes doing so.

Both teams probing Facebook and Google are politically bipartisan, which will make it harder for either Google or Facebook to rally allies on either side. New York AG James is a Democrat, Texas AG Paxton is a Republican, and the various other AGs participating come from both parties.

Given all this political pressure, it seems inevitable that there will have to be some kind of rollback in the amount of data that either company collects from users. Europe already has the General Data Protection Regulation (GDPR), and the similar California Consumer Privacy Act (CCPA) goes into effect Jan. 1, 2020. 

If a few more large U.S. states or Canada roll out similar rules, then Facebook, Google and every other online company that handles personal data will have no choice but to apply those rules universally.

That will make a difference, but only if it's applied universally, and not just to Big Tech. There are plenty of other companies that handle just as much of your personal data but are not household names. 

Ever heard of Acxiom or AppNexus? Those companies, and plenty of others that handle your personal data, would prefer to stay out of the public eye -- and these investigations against Facebook and Google show exactly why.