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Justice Department No. 2 Cites ‘Serious’ Tech Competition Issues

Ben Brody and David McLaughlin

(Bloomberg) -- The U.S. Justice Department No. 2 official explained the reasoning behind an investigation of large technology platforms, underscoring the department’s commitment to the probe at the highest levels.

Deputy Attorney General Jeffrey Rosen said in a speech Monday at an American Bar Association antitrust forum in Washington that there are “serious and substantive issues” regarding competition by the largest online platforms. While he noted that top department officials are keeping close tabs on the inquiry, no conclusions have been reached yet about the sector, he said.

“Even dynamic industries characterized by rapid technological progress can be monopolized to the detriment of consumers,” Rosen said.

The Justice Department is investigating whether Alphabet Inc.’s Google and Facebook Inc. thwart competition laws as part of its broader inquiry into digital marketplaces. Attorney General Bill Barr, who has antitrust experience, authorized the probe and is closely watching it.

Federal Trade Commission Chairman Joe Simons, who spoke after Rosen, said his agency is also conducting “multiple” probes of technology companies. Facebook has disclosed it’s also being investigated by the FTC.

Rosen compared the technology giants to the film industry, which was the subject of multiple antitrust actions in the 20th century. He also referenced the U.S. case against Microsoft Corp. that began in the late 90s and ended in settlement.

He cited an appeals court ruling that the software giant’s “operating system was a monopoly” because it was so broadly used that consumers and developers alike were reluctant to switch to competitors.

Some antitrust scholars have said that Google, Facebook and other contemporary tech giants are dominant because they benefit from so-called network effects in which platforms become more valuable the more they are used. The companies say they face robust competition.

Rosen also acknowledged there are other concerns about the companies that go beyond antitrust that may need to be addressed.

“We do not view antitrust law as a panacea for every problem in the digital world,” Rosen said. “We are keeping in mind other tools in areas such as privacy, consumer protection, and public safety as part of a broader review of online platforms, to whatever extent warranted.”

To contact the reporters on this story: Ben Brody in Washington, D.C. at btenerellabr@bloomberg.net;David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Mark Niquette

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