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Google, Amazon Targeted in DOJ Antitrust Chief's Speech

Ben Brody
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Google, Amazon Targeted in DOJ Antitrust Chief's Speech

Google, Amazon Targeted in DOJ Antitrust Chief's Speech

(Bloomberg) -- The Justice Department’s antitrust chief came out swinging against Google and Amazon.com Inc. on Tuesday, arguing that big technology companies are "digital gatekeepers" that may struggle to defend themselves by arguing their products are free or really cheap.

Makan Delrahim compared tech giants to previous companies that the U.S. government broke up, such as Standard Oil, and defended the power of antitrust laws to police anticompetitive conduct in the technology sector.

"The current landscape suggests there are only one or two significant players in important digital spaces, including internet search, social networks, mobile and desktop operating systems, and electronic book sales," Delrahim said in a Tuesday speech, according to remarks released by the department.

Many U.S. antitrust experts have dismissed calls for a crackdown on tech companies, arguing that there’s no consumer harm in their conduct because the businesses offer free or cheap services and products. Delrahim dismissed that line of thinking as blinkered.

"The antitrust division does not take a myopic view of competition," he said. "Price effects alone do not provide a complete picture of market dynamics, especially in digital markets in which the profit-maximizing price is zero."

Delrahim argued that "harm to innovation" is also an important dimension of competition that can have far-reaching effects.

"Consider, for example, a product that never reaches the market or is withdrawn from the market due to an unlawful acquisition," he added. "The antitrust laws should protect the competition that would be lost in that scenario as well."

He also offered what he called "generalized and non-exhaustive observations about anticompetitive conduct and types of transactions in digital markets that could trigger closer scrutiny."

In one, he spoke about "coordinated conduct that creates or enhances market power," citing a proposed 2008 agreement between Google and Yahoo to have the former power search ads for the latter. The department told the companies it would file suit against the agreement and the companies backed away, Delrahim said.

He also discussed the U.S. government’s antitrust case against Microsoft Corp., which he said arguably paved the way for companies like Google, Yahoo, and Apple Inc. to enter the market with their own desktop and mobile products.

To contact the reporter on this story: Ben Brody in Washington at btenerellabr@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Molly Schuetz

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