As federal regulators launch fresh investigations into Silicon Valley, their history of drawn-out cases has companies on edge.
In taking on an industry that moves at lightening speed, federal officials risk actions that could appear to be too heavy-handed or embarrassingly outdated, some analysts and antitrust experts say. Indeed, in May, U.S. officials said they would step up their policing of Myspace’s privacy policies even though the company has long fallen out of fashion to behemoth Facebook.
Others want the government to aggressively pursue abusive practices but question whether antitrust laws are too dated to rein in firms that are continually redefining themselves and using their dominance in one arena to press into others.
“In tech, market definitions are difficult because companies are changing so fast, and that makes antitrust a blunt tool,” said Ed Black, president of the Computer & Communications Industry Association, a trade group that supported the Justice Department’s case against Microsoft.
Antitrust officials at the Federal Trade Commission and Justice Department say that they are sensitive to the swift changes in tech firms but that they cannot shy away from their enforcement obligations, even dated ones.
“It’s challenging to keep up with rapidly changing markets, but that is part of our job,” said Richard Feinstein, director of the FTC’s bureau of competition.
In recent months, antitrust regulators around the world initiated cases involving Silicon Valley’s new guard — Google, Apple and Amazon.
European and U.S. regulators are investigating whether Google is using its dominance in Web search to promote its own products over competitors’ when listing search results.
The Justice Department, meanwhile, has accused Apple and book publishers of fixing e-book prices to beat back severe discounts offered by Amazon.
The cases have raised questions about the effectiveness of the government’s antitrust tools. Some tech analysts say the government is tackling Google just as mobile apps are raising questions about the usefulness of Web search. Others experts note that a government win against Apple and the book publishers would only ensure Amazon’s dominance over the e-book market.
“Facebook, Twitter and Pinterest didn’t exist a decade ago, so think of what it means for an antitrust enforcement action that could take more than 10 years to wind itself down to its logical conclusion,” said Eric Goldman, a professor of technology law at Santa Clara University.
That’s why the government must choose its cases carefully, some officials said.
“Because of the fast-paced nature of the technology sector, our approach to antitrust issues in this area is highly-focused and carefully tailored, recognizing the likelihood of rapidly changing product markets,” Acting Assistant Attorney General Joseph Wayland said in an e-mailed statement.