FTC chief Leibowitz now watches over firms he once lobbied for

By Cecilia Kang
Washington Post Staff Writer
Friday, December 25, 2009; A18

When Jon Leibowitz was nominated in 2004 to sit on the Federal Trade Commission, critics feared that the former Hollywood lobbyist would be soft on the media and high-tech industries he used to promote. They presumed he would overlook emerging privacy concerns surrounding Google and Internet social networking sites in favor of the advertising industry.

But in the nine months since President Obama picked Leibowitz as the FTC's chairman, the agency has churned out a steady stream of actions aimed at the high-tech sector.

"I had my initial misgivings about Jon going to the commission, but I will admit, as chairman he has helped waken an agency that was in a deep digital slumber," said Jeffrey Chester, head of the Center for Digital Democracy, which advocates for consumer privacy protections on the Internet.

Last week, the FTC filed an antitrust lawsuit against Intel, alleging that the company is maintaining its global dominance in the computer processor market through bribes and bullying. This year, it has investigated Google's spreading tentacles on the Web at least twice. Leibowitz has held workshops on online privacy, the link between advertising and child obesity, and the future of journalism in a digital age.

Many industry experts say it's too early to say if the actions of the FTC, an independent agency, will set the stage for bigger regulatory pursuits. And they note that much of the focus on technology began before the Obama administration took office.

'Referee on the field'

The real test on antitrust will be with a major media or high-tech merger, such as that of Comcast's $30 billion union with NBC Universal. That merger will be handed early next year to either the FTC or Justice Department for antitrust review.

But already the FTC has offered a hint of taking a more vigorous approach to competition in the high-tech sector, a shift in recent years as Internet firms have become a bigger influence on the economy.

"The tech sector is a driving force and dynamic force in America today, so we spend some time thinking about it, in the same way we think about health care because health care is enormously important to Americans," Leibowitz said in a recent interview.

That approach is taking the agency into murky waters, where balancing consumer protections can rub up against a fast-moving industry that has historically been leery of regulation. Opponents say high-tech firms need the freedom to create new products and business models without being constrained by federal rules.

The lawsuit against Intel drew objections from one high-tech trade group, the Association for Competitive Technology, which called the action hasty and said it could hurt Intel's ability to compete.

"One of the most troubling aspects of this complaint is that it appears to advocate for an exploration of Intel's intellectual property, which is a dangerous precedent for all innovation firms, big and small," said the association's president, Jonathan Zuck.

Ed Black, president of another trade group, the Computer & Communications Industry Association, is more comfortable with the FTC's activity.

"It's good to have an FTC that acts as a referee on the field and not a policeman unless absolutely necessary," Black said. "And everyone on the Democratic side of the FTC and Justice Department says they aren't being aggressive on antitrust but want to restore the balance after what the Bush administration did, which was to completely overlook antitrust."

A fine line

Leibowitz acknowledged a need for balance and said there is not a consistent tactic to use.

In some cases, pursuing investigations has been enough to nudge companies toward the agency's point of view. The commission's investigation of board ties between Google and Apple, for instance, prompted Google chief executive Eric Schmidt to resign from Apple's board of directors and Genentech founder Arthur Levinson, who sat on both boards, to resign from Google's board.

But recent FTC studies on childhood obesity and advertising reported that food companies didn't do a good enough job of self-regulation in addressing links to adolescent health problems. That could spur a call for more government action.

Complicated questions call for more scrutiny, said Leibowitz, who is married to Washington Post editorial columnist Ruth Marcus. This week, the FTC prolonged its review of Google's acquisition of AdMob, a mobile phone advertising firm, and asked for more information from the search giant. Analysts suggest the deal could give Google an early foothold in the nascent market for such advertising.

The FTC's intervention with Intel, the Google-AdMob merger, and the Google and Apple boards were all notably forward-looking. Market forces at play today factored into its actions, but because of the fast-evolving technology landscape, it also examined how companies may shape future competition in the Internet search, graphics chips and mobile software market.

Leibowitz underscored his mandate to enforce antitrust laws and protect consumers, saying his preference is not to impose new rules on the high-tech industry if possible.

"There's times we use a bully pulpit and commend self-regulation and times where there is a real need to go after malefactors," Leibowitz said. "You want to make sure there is an even playing field."

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