August 01, 2019

According to a story in the Wall Street Journal, the Justice Department (DOJ) and Federal Trade Commission (FTC) have settled their turf war and initiated an antitrust review into companies in e-commerce, online retail and search.  The purpose of the probe is to examine whether or not companies such as Amazon, Apple, Facebook or Google's parent, Alphabet, have unfairly stifled competition and innovation and, therefore, negatively impacted consumers.

The Justice Department's antitrust group "is reviewing whether and how market platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers," the department said regarding the inquiry.

The review's goal is "to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and ensure [that] Americans have access to free markets in which companies compete on merits to provide services that users want," the statement went on to say. "If violations of law are identified, the department will proceed appropriately to seek redress."

The public response to the Wall Street Journal story has been sparse.  Apple did cite an earlier statement by chief executive officer Tim Cook ("We are not a monopoly"), and Google suggested that the press look at last week's testimony to Congress by their director of policy, Adam Cohn.   Stocks got hit in after-hours trading.  Will D.C. insiders stop with the tech giants or will the investigation extend to include companies such as Acxiom, Epsilon, Disney or Twitter?

If there is success, however, in breaking up any part of the Google or Facebook family of companies, there is rationale to justify a look at other marketing behemoths or "big media" that have skirted past investigation.

The House has had a concurrent investigation led by Democratic presidential candidate Senator Elizabeth Warren (Mass.).  Tech executives from Google, Facebook and Amazon testified in front of this committee last week.  Senator Warren has been calling for the break-up of the tech giants' holdings.

Madison Avenue and Wall Street alike will need to keep an eye on the progress of the investigation.  The review will have little to no impact (suggested by investors' response to the news, which found stocks down only about 1 percent) or it can have a broad and sweeping effect that could extend beyond the tech giants to include others in the media and marketing sectors.

All eyes will be on Washington as these investigations progress.  Those on the periphery, sitting within big media, can only sit back, watch and hope their brand does not find its way to the desk of Senator Warren or others focused on breaking up monopolies or centers of power — all supposedly "for the betterment of the American consumer."

There is no question that there are anti-trust issues with some of the biggest companies in our industry, but the answer is not to break them up.   What our representatives will learn as they go down this path is that without scale, you simply cannot be successful and do business online in these areas.  With the required scale, however, you are simply too big.  It's that simple.  We will need new laws and regulations to cope with this challenge but, unfortunately, neither the DOJ nor the FTC are currently equipped to deal with this.

Author

Gabe Greenberg is a media veteran with over 20 years’ experience.  Greenberg is currently CEO of GABBCON, a media advisory, search consultancy, and events company. As an advisor to brands, Adtech companies, agencies and blockchain companies, Green… read more

Appeared first in Media Village

 

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