Tech Giants Face Antitrust Investigation, Investor Scrutiny

Tech Giants Face Antitrust Investigation, Investor Scrutiny

The last thing the world’s technology giants need right now is another regulatory headache. Amazon, Apple, Facebook, and Google have been kicked up and down the corridors of the U.S. Capitol building this summer, only to find out in late July that the Justice Department will be seeing if it can make a case against any of them for antitrust violations. As if that weren’t bad enough, now they have to worry about what to tell their investors about it.

It’s a major piece of news, of course, that the Department of Justice is going to examine the four tech titans for anticompetitive behavior. But to the standard-bearers of Silicon Valley, it may have felt like just one more whack at the piñata by Washington. This summer, the hyper-partisan lawmakers of Congress have united in their attacks on Big Tech. Over the last several weeks:

That’s all before you get to the antitrust investigation, which isn’t limited to the DOJ. The House Judiciary Committee opened a bipartisan investigation into the “power and practices” of major tech companies. At one hearing that has already taken place Rep. David Cicilline (D-RI), sharply questioned Amazon’s associate general counsel about the company’s promotion of its private label products.

Meanwhile, back in May, Justice divvied up investigative duties with the FTC. The Justice Department is investigating Google and Apple, while FTC is taking on Facebook and Amazon. The DOJ’s announcement of its antitrust investigation in July, which was not tied to specific companies, was a further – and unusual – step. Normally, DOJ would keep such an investigation out of the public eye.

Despite the fact that the antitrust inquiries have been splashed across the newsstands, each public company must choose for itself what to say about them. And the three companies that have made quarterly earnings reports since the news broke have each pulled the curtain back to different degrees. Amazon was the most tight-lipped, including no specific statement about an antitrust investigation in its 10-Q. The “Risk Factors” section of that filing includes just an abstract paragraph with the heading “Government Regulation Is Evolving and Unfavorable Changes Could Harm Our Business.”

Alphabet went a little further in its 10-Q. Without stating whether it was a target, it said that “In July 2019, the Department of Justice (DOJ) announced that it will begin an antitrust review of market-leading online platforms.”

Facebook was the most transparent of all. In a press release announcing its second-quarter results, it said: “In June 2019, we were informed by the FTC that it had opened an antitrust review of our company. In addition, in July 2019, the Department of Justice announced that it will begin an antitrust review of market-leading online platforms.” Of course, the danger of failing to disclose information may be most top-of-mind at Facebook. In addition to its $5 billion fine over the Cambridge Analytica scandal, it just agreed to pay the SEC $100 million for its misleading disclosures.

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