Hi, everyone. It's Shira. It hasn't even been two weeks since news outlets started to report that U.S. antitrust authorities were carving up their turf to pursue possible monopoly investigations into Google, Facebook Inc. and other U.S. technology titans.
Investors freaked out for a day, but the regulatory risk has settled back into background noise. It's this nagging but probably-not-immediately-terrible danger.
That assessment is likely correct. The wheels of justice move verrrry slowly in Washington and other world capitals. But there was a reminder on Wednesday of just how dangerous it can be when government investigators start digging.
The Wall Street Journal reported that people at Facebook Inc. are concerned about internal emails that appear to show Mark Zuckerberg did not prioritize compliance with a 2012 U.S. Federal Trade Commission agreement to better protect people's digital privacy.
Those emails were unearthed as part of the FTC's ongoing investigation into whether Facebook's more recent privacy missteps represented violations of that 2012 consent decree. Any direct involvement by Zuckerberg in not taking seriously people's digital privacy would be embarrassing to Facebook, of course, and it could compel the FTC to try harder to name Zuckerberg personally in any new settlement with the agency.
The episode also shows the danger of investigations, whether it is Facebook's multiple run-ins, or the potential future antitrust investigations of U.S. tech superpowers. History has shown that it is hard to predict what people with government mandates might find that could embarrass a company, or provide evidence of legal violations.
Bill Gates's in-box was practically a star witness in the U.S. government's antitrust case against Microsoft Corp. Do you think Gates would be the only tech executive to write candid emails ordering underlings to "crush" competitors and "take away their oxygen," to cite snippets of memos that the U.S. government highlighted in its ultimately unsuccessful effort to break up the company?
More recently, FTC staff pursuing a possible antitrust case against Google dug up documents that showed the company boosted its own services and demoted rival comparison shopping websites in search result tests. When search-quality raters reacted negatively to the changes, "Google changed the raters' criteria to try to get positive results," according to portions of an FTC staff report from 2012.
FTC staff also quoted Google's top economist, Hal Varian, saying that the company's market share was being underestimated. "From an antitrust perspective, I'm happy to see them underestimate our share." You can read the most damning and embarrassing excerpts here.
Armed with evidence like this, FTC staff recommended suing Google for three potentially anticompetitive business practices, and said it was a "close call" against concluding that Google's preferential treatment of its own services violated antitrust law. FTC commissioners ultimately voted to close the investigation without taking action, and Google agreed to make some voluntary changes.
Just last month, internal company documents came back to bite another U.S. technology giant. A U.S. federal judge ruled against Qualcomm Inc. in an antitrust case, and said she believed the contents of Qualcomm executives' emails, notes and other materials more than what these people said in court. The chip maker disagreed with the judge's decision and her assessment of its executives' credibility.
Government probes are unpredictable at best because no one knows what they will find. As U.S. antitrust enforcers knock on Big Tech's doors again, the companies and their investors may not be afraid enough of what is lurking in those in-boxes.--Shira Ovide
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