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Why is competition law affecting tech giants in the US?

Why is competition law affecting tech giants in the US?

Violet

30/07/2019

Despite becoming ever-increasingly popular among users, the biggest tech companies in the US are facing growing criticism from the authorities. Their presence and popularity has soared in recent years, and this has led to growing concerns that they are creating a monopoly in the market.

In response to these concerns, the US Department of Justice recently announced that it will carry out an investigation into the competition practices of ‘leading online platforms’. This investigation is being carried out to ascertain whether companies are breaching competition laws and the Department of Justice even has the power to break up companies that it thinks are too dominant. It has not named the platforms that it will investigate, but has said that its report will cover search engines as well as social media and retail services.

In light of increasing digitalisation, this crackdown on big tech companies is interesting. Certain tech giants have huge numbers of users and huge amounts of data about these users. Their power has been seemingly unchecked thus far, so it is to see that the US government is moving with the times by starting to investigate whether these companies are abiding by competition law more keenly. In the future, this type of investigation will be key for law firms to be aware of, as they might be advising clients in these sectors, so they will need to be aware of how tech companies will be treated in future.

All aspiring commercial solicitors should be aware of the investigation that the Department of Justice has announced. It could have significant consequences for the future of companies whose focus is ‘online’ content. Many commercial law firms have specialist antitrust or competition departments to advise their clients on competition law. Going forward, firms will need to exercise caution in their approach to certain clients, because competition law might have a stronger influence in their business decision making than previously. Competition law might also become a growing area of focus as more and more companies rely on advice from legal professionals if and when they see tighter restrictions in their sectors.

The investigation carried out in the US by the Department of Justice means that the biggest businesses might have to rethink their models. One example might be that they are forced to break off subsidiaries from larger parent companies. Law firms will need to be involved at the advisory stages of these changes. Although these changes seem to be targeted for the moment at US companies, the global nature of these companies means that there will be widespread consequences of any decision that the Department of Justice makes.