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American Antitrust Amplifiers Signal Ruptures on Big Tech Probes



WASHINGTON – The bad blood between US government agencies investigating tech industry giants has grown more intensively with the delivery of a letter from one agency to another, which can be considered the equivalent of a reduction step.

Both agencies – the Federal Trade Commission and the Department of Justice's antitrust management department – have the power to investigate whether US companies violate antitrust law by reducing competition. In recent months, the two companies, as well as a number of Attorneys General, have launched a large profile of tech giants such as

alphabet
Inc.


GOOG -0,67%

on Google and

Facebook
Inc.


FB -0.52%

which dominate almost every aspect of the digital life of Americans.

Now in a letter sent to the Department of Justice late last week, the FTC complained about the department's behavior and raised concerns about recent interactions between the two agencies, according to people familiar with the matter.

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An undisclosed earlier letter signed by FTC Chairman Joseph Simons raises the prospect of a long-standing power-sharing agreement between agencies being crushed. It also raises broader concerns that boiling tensions could ultimately disrupt agencies' focus on Big Tech ̵

1; one of the biggest and most significant endeavors any of them has undertaken over the years.

The FTC and the Department of Justice declined comment.

The Justice Department is investigating the largest tech companies in the US for allegedly monopolistic behavior. About 20 years ago, a similar case threatened to destabilize Microsoft. WSJ explains.

The chairman of the Senate Antitrust Subcommittee, Republican Mike Lee of Utah, said he planned to ask about the letter and the tensions that reflected Tuesday's hearing. Both Mr Simmons and the head of the DOJ's antitrust department

Macan Delrahim

are expected to testify.

"St. Lee is familiar with the letter and intends to inquire into tomorrow's oversight process whether the agency's resolution process works and, if not, whether the FTC and DOJ are involved in duplicate investigations, "Lee's spokesman said Monday. This authorization process, a longstanding contract between the two agencies, helps determine which one investigates specific areas.

Mr. Lee raises concerns about clashes between agencies on several recent occasions – for example, when the Justice Department takes the unusual step of faking an FTC antitrust case against a chip maker

Qualcomm
Inc.

this year. He even suggested that having two federal executive agencies could contribute to the problems.

"This type of dysfunction and confusion illustrates why having two agencies on wooden heads does not effectively enforce antitrust rules," Mr Lee said in August.

The FTC and the Department of Justice share the antitrust authority in the United States, although they have sometimes been rivals and engaged in gas battles, officials at both agencies have acknowledged that their interactions have become abnormally strained lately.

Technical problems are a major contributing factor. Both the FTC and DOJ are under considerable pressure to investigate and potentially challenge a number of actions by a handful of companies –

apple
Inc.

and

Amazon.com
Inc.

there are two others – which dominate online search, retail and social media.

One of the main points at the moment is whether the Justice Department will conduct its own antitrust investigation on Facebook, according to people familiar with the matter.

Messrs. Delrahim and Simmons earlier this year negotiated agreements that freed the Justice Department to investigate Google for possible monopoly tactics and also gave the office jurisdiction over Apple for such issues. The FTC has reserved the right to investigate monopoly issues involving Facebook and Amazon.

But then Mr Simons met with DOJ officials, including the Attorney General

William Bar,

in early July to talk about Facebook in particular, people familiar with the matter said. The two agencies have agreed that the Justice Department will not pursue Facebook over several issues the FTC is already focusing on, but could investigate the social media giant in other areas that could cause antitrust issues, they say people.

In recent weeks, however, the Department of Justice and the FTC have disagreed on the interpretation of the agreement and whether each country has complied with it, people say.

In late July, the Department of Justice announced a broad review of whether dominant online platforms were generally unlawfully tight competition. This raised the rare opportunity for the two agencies to try Facebook at the same time.

The FTC's Facebook probe investigates, among other things, whether the social media giant is pursuing acquisitions designed to eliminate potential future competitors. In the meantime, the Justice Department is also complaining to Facebook, including people who advocate the dissolution of the company.

Facebook did not provide a comment in response. The company said in the summer that the FTC was investigating "social networks or social media services, digital advertising and / or mobile or online applications."

Google and Amazon declined to comment. Apple did not immediately respond to requests for comment.

Another painful situation, which has been going on for months, is the Justice Department's decision this year to enter the FTC's anti-corruption trial against Qualcomm. The commission won a favorable ruling from a federal judge in California in May, which imposed major changes to Qualcomm's business practices, but the court of appeals last month remained the effect of that decision.

The Ministry of Justice supports Qualcomm, stating the trial The judge's decision was incorrect in several respects. He also said in court documents that the decision would reduce Qualcomm's competitiveness in 5G innovation and affect national security. The Court of Appeal referred to the Justice Department's position when it granted a stay to Qualcomm last month.

FTC officials believe that the department misunderstood their cases and that the justice minister did not properly consult them before the intervention, according to people familiar with the matter.

Qualcomm stated that its business practices were justified and legitimate.

The battles between the two agencies are "a real drag on the effectiveness of the American system [antitrust]," says William Kovacic, a former FTC commissioner who is now a law professor at George Washington University. "It does not predetermine individual efforts for failure in any way, but it diminishes the prospects for success. This makes it difficult to achieve a good result. ”

Email John D. McKinnon to john.mckinnon@wsj.com and Brent Kendall at brent.kendall@wsj.com

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