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A Day of Reckoning for Tech Giants? Here’s Another View

Logan Breed, Hogan Lovells.

While some antitrust practitioners are skeptical of the U.S. Federal Trade Commission’s announcement that its Bureau of Competition is convening a task force to monitor competition among the tech giants including Alphabet Inc.’s Google, Facebook and others, as reported last month, that view is hardly universal.

And since then, the FTC also announced it has demanded information from seven big broadband internet service providers last week on their data collection and privacy practice and procedures.

Hogan Lovells’ Logan Breed is among the antitrust lawyers who think the FTC task force will be consequential and isn't mere window-dressing in response to political pressure.

Breed, a partner in the firm’s Washington, D.C., regulatory group, said the 17-member task force is likely at a minimum to tie up many hours of inside and outside counsels’ time and effort with investigations of past deals and future ones, even if the likelihood of the FTC actually going to court to unwind deals like Facebook’s 2012 acquisition of Instagram is small. Facebook recently announced plans to integrate WhatsApp, Facebook and Instagram.

“I know the leadership at the agency is committed to making this a substantive working team that is going to be tasked with a broad range of potential issues they could pursue,” Breed said.

Breed attended the American Bar Association’s annual spring meeting last week in D.C., where the FTC commissioners and the director of the Bureau of Competition talked about the types of issues that they envision the task force addressing, he said. All of them indicated that they believed it could take on everything from backward-looking reviews of consummated mergers to unilateral conduct investigations involving the acquisition or maintenance of monopoly power to investigations of new mergers.

Breed said that as an indication of what FTC’s new leadership thinks this task force could accomplish, they also referred back to FTC’s 2002 Merger Litigation Task Force, which in addition to reviewing the agency’s approach to litigation, resulted in a legal challenge to a hospital merger.

“I would expect that tech companies will be on notice that their conduct and possibly their past mergers and future mergers will be under more scrutiny because of this task force than they were before,” he said, adding that companies called on the carpet might have to endure multiyear probes.

“It is expensive to defend an FTC investigation,” he said. “It is going to take time, money and attention from other things those companies were going to be doing.” Short of a court challenge, he said, the task force could also make an impact “if the task force would come up with new theories of harm, new ways to apply antitrust laws in the tech industry, or something else that expands the issues the FTC plans to address in the future.”

FTC Broadband Inquiry

Meanwhile, in more evidence of increased regulatory scrutiny, the Federal Trade Commission on March 26 demanded information from seven of the largest broadband internet service providers, or ISPs, including Verizon, AT&T and Comcast about their data collection and privacy practices, including specifically what kind of data about consumers the companies are collecting from their devices, whether it is being shared with third parties and whether they have disclosed to their customers what they are doing. They are also asking about their policies for letting customers examine, correct or delete their personal information.

The orders were sent to: AT&T Inc., AT&T Mobility LLC, Comcast Cable Communications doing business as Xfinity, Google Fiber Inc., T-Mobile US Inc., Verizon Communications Inc., and Cellco Partnership Inc. doing business as Verizon Wireless, according to the FTC.

"The FTC is initiating this study to better understand Internet service providers’ privacy practices in light of the evolution of telecommunications companies into vertically integrated platforms that also provide advertising-supported content," the agency said in a statement. "Under current law, the FTC has the ability to enforce against unfair and deceptive practices involving Internet service providers."

The Federal Communications Commission passed ISP privacy rules under the Obama administration requiring consumers to opt-in consent to use or sell customer data that could be used for targeted ads. But they were rolled back when the Trump administration took office in 2017 and reversed a 2015 agency decision to reclassify broadband internet access as a common carrier service regulated by the FCC and repealed net neutrality. That returned oversight of consumer privacy of broadband, wireless and internet companies to the FTC under a memorandum of understanding between the agencies.

The FTC's action comes as pressure is building from privacy advocacy groups and in state and federal legislatures for more consumer protections on users' personal data.

Read More: 

Tech M&A Counsel Can Take Precautions as Regulators Propose Reversing Approved Deals

The New FTC Task Force: Will Tech Giants Face a Day of Reckoning on Antitrust?

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