Senators Raise Concerns About Google Buying Fitbit, Amid DOJ Scrutiny

Regulators shouldn’t approve Google’s buy of Fitbit (see 1911010054) until various antitrust investigations are complete, Sen. Josh Hawley, R-Mo., told us. Other concerned senators in interviews urged antitrust regulators to respond to a platform facing mounting scrutiny.

“I’d have huge concerns about allowing that to go through until that [DOJ] investigation is completed,” Hawley said. “The best we can say about Google is they’re a potential monopolist.” The platform is sending the signal it can do whatever it wants and let others pick up the pieces, like American consumers, “whose privacy is destroyed,” he said. The company didn’t comment.

“Of course it gives me pause,” said Sen. Marsha Blackburn, R-Tenn. She also drew the connection between Google’s market dominance and data privacy. A “lax” FTC and DOJ “is how we got ourselves into this problem,” said Sen. Mark Warner, D-Va. The Fitbit deal requires federal review, he said.

“It’s going to have to be reviewed for antitrust implications,” said Sen. John Kennedy, R-La. “Do I have concerns? Sure.” He expressed disappointment Congress has been discussing privacy issues for three years. Legislators seem to be “born tired and raised lazy,” he said.

“It’s not surprising that data and its market value as an asset class would raise competition concerns,” DOJ Antitrust Division Chief Makan Delrahim said Friday at a Computer & Communications Industry Association and Competition Policy International antitrust conference at Harvard. Market power might be better measured in these new markets by shares of control over data, rather than shares of sales or other traditional measures, he said: “Antitrust enforcers may need to play an even greater role in zero price markets, where the absence of price to the end consumers could make private damages recovery more difficult.”

The division is vigilant about potential for anticompetitive effects “when a company cuts off a profitable relationship supplying business partners with key data, code or technological inputs in ways that are contrary to the company’s economic interests,” the antitrust chief said. He noted that dominant firms, without competition, can reduce quality of products -- such as weakening privacy -- without losing many users: “Although privacy fits primarily within the realm of consumer protection law, it would be a grave mistake to believe that privacy concerns can never play a role in antitrust analysis.” The division's examining different ways to measure the value of data transactions and define digital markets, he said.

Commissioner Noah Phillips defended the FTC's enforcement record. Asked about clamoring for a new U.S. digital privacy agency (see 1911050062), he said it’s unclear what problem that would solve. "If the deficit is regulatory, Congress can deal with it,” he told the conference streamed from Boston.

Phillips offered a similar take on calls to break up big tech platforms. To resort to a break up, enforcers must first identify the failure of competition. The second question is whether the remedy will have the desired impact. Phillips defended structural remedies in the agency’s $5 billion settlement with Facebook, saying CEO Mark Zuckerberg must now certify the company is complying with privacy obligations.

The impact of the Facebook remedy won’t be known for several years, said ex-FTC Chairman William Kovacic, now George Washington University Competition Law Center director. Many observers write off the conduct controls at Facebook as “meaningless,” he said, but historical research shows conduct control has been undervalued. For example, the Microsoft litigation induced a measure of restraint that meant others had more room to maneuver and breathe, he said. Many have claimed the Microsoft antitrust case allowed companies like Google and Facebook to grow.

It’s certainly fair to argue the FTC has missed some things, Phillips said. But he said the agency's taking a thorough and introspective look and responding. The Competition Bureau’s Tech Task Force is now the dedicated Technology Enforcement Division, he said.

The answer isn’t to destroy what exists, Kovacic said. If you burn it down, you will burn down a lot of useful capability in the process, he said. It’s possible, given the current conversation, that the agency’s competition work moves to DOJ, privacy's split off into a new agency and the FTC's left to focus on consumer protection issues, he said.