Now more than ever, technology is influencing the way we do business, communicate, move through and around the world, access and manage our homes, receive and administer healthcare, make purchases, secure information, and protect our most valuable property. Morrison Foerster keeps pace with this rapidly evolving landscape across our internationally recognized corporate, finance, intellectual property, and litigation practices. MoFo Tech brings together our insights relating to fields such as blockchain and distributed ledger, cloud and as-a-service technologies, driverless cars, drones, fintech, computer hardware and software, the Internet of Things, semiconductors, and telecommunications. The MoFo Tech blog offers real-time, in-depth analyses of the trends and complex issues shaping the global technology industry.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Scott Llewellyn’s practice focuses on complex litigation in federal and state courts around the country, with an emphasis on patent and trade secret disputes. Over the past decade, he has worked on some of the most significant, high–profile IP cases involving technology for televisions, smartphones, and self–driving cars, relying on 40 years of experience with computer hardware and software. Scott also has significant experience with business divorce cases before courts and arbitrators, involving a mix of trade secret, patent, tort, and contract claims relating to technology development and implementation.Scott also has successfully tried general commercial arbitration and agency matters, briefed and argued various appeals in federal appellate court, and tried more than 20 cases for the Denver City Attorney’s office, most of them jury trials.Scott also has an active pro bono practice, having worked on a variety of criminal and immigration appeals, and having represented Colorado criminal defense and mental health organizations in high–profile suits against the state of Colorado for violations of the constitutional rights of defendants.At MoFo, Scott serves on the board of the Morrison & Foerster Foundation. In the broader legal community, he serves on the boards of the Colorado Lawyers Committee and Drop in the Bucket (a charity that builds wells and sanitation systems in sub–Saharan Africa).After law school, Scott clerked for the Honorable Clarence A. Brimmer, District of Wyoming, and the Honorable Diarmuid F. O’Scannlain, Ninth Circuit. He was also previously an adjunct professor at the Georgetown University Law Center.

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Scott Llewellyn’s practice involves complex litigation before state and federal courts around the country, with an emphasis on patent and trade secret disputes for high-tech companies, to which he brings more than 35 years of experience with computer hardware and software, in particular relating to the processing and transmission of audio, video, voice, and other types of data. Mr. Llewellyn has also tried commercial arbitration and agency matters; briefed and argued various appeals in federal appellate court; and tried more than 20 cases for the Denver city attorney’s office, most of them jury trials.

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At the Intersection of Technology, Law, and Business

At the Intersection of Technology, Law, and Business

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Antitrust scrutiny of technology companies in the United States has reached an unprecedented level of intensity. In the last several months alone, (1) the U.S. 

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Uncharted Territory: U.S. Antitrust Enforcement in the Technology Sector

Uncharted Territory: U.S. Antitrust Enforcement in the Technology Sector | MoFo Tech

Megan E. Gerking

Antitrust scrutiny of technology companies in the United States has reached an unprecedented level of intensity. In the last several months alone, (1) the U.S. Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) each announced major investigations into digital platforms; (2) as part of its own wide-ranging, bipartisan investigation, the House Judiciary Committee conducted another round of hearings exploring the impact of digital platforms on competition; and (3) in parallel, states have launched their own joint investigation of large technology companies in consultation with the DOJ. These developments underscore the reality that technology companies of all stripes – especially digital platforms – are operating in an increasingly complex, evolving, and fraught regulatory environment.This article discusses recent developments in the U.S. regulatory landscape, explains how they dovetail with broader antitrust enforcement trends, and explores their potential implications for technology companies.DOJ and FTC Investigations Into Digital PlatformsOn July 23, 2019, the DOJ announced that the Antitrust Division has launched a broad “review” of whether and how “market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.” Although the announcement did not single out specific companies, it stated that the review is focused on concerns relating to “search, social media, and some retail services online.” In addition, the DOJ noted that it is conferring with and seeking information from various interested parties, including the public and industry participants “who have direct insight into competition in online platforms.” On August 30, Google’s parent company, Alphabet, confirmed that it had received a civil investigative demand (CID) from the DOJ requesting documents and information relating to prior antitrust investigations in the United States and abroad.The DOJ review parallels ongoing efforts by the FTC, which has made <a href="https://www.ftc.gov/news-events/events-calendar/2018/10/ftc-hearing-3-competition-consumer-protection-21st-century">examining</a> and investigating the antitrust implications of large technology companies a major enforcement priority. Earlier this year, the FTC launched the Technology Task Force (TTF), a new division of the Bureau of Competition dedicated to “monitoring competition in U.S. technology markets, investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted.” In addition to examining industry practices and conducting law enforcement investigations, the TTF will coordinate and consult with staff throughout the FTC on technology-related matters, including reviewing prospective and consummated mergers in the technology sector. The TTF is already staffed by at least 17 attorneys detailed from divisions across the Bureau of Competition and will include one or more specialists from the private sector, with direct oversight by senior agency officials. Since its deployment, the TTF has been very busy, proactively meeting with Silicon Valley companies to gather information and considering potential investigations. The extent to which the FTC and DOJ are coordinating their inquiries is unclear. In June, it was reported that the <a href="https://www.nytimes.com/2019/06/03/technology/facebook-ftc-antitrust.html">FTC and DOJ reached a formal clearance agreement</a> dividing up review of major technology companies, although such an agreement has not been confirmed by the agencies. It is unusual for the agencies to formally split up “jurisdiction” over companies. Instead, clearance is typically determined by industry or at the outset of a formal investigation, with investigative authority going to the agency with greater familiarity with the relevant product, service, or sector.State Attorney General InvestigationsFor some time, a large, bipartisan group of state attorneys general (AG) has reportedly been preparing to launch a joint investigation of large technology companies. The states have been closely coordinating their efforts with the DOJ. In July, representatives of several <a href="https://www.politico.com/story/2019/07/25/states-antitrust-william-barr-1435474">state AGs met with senior DOJ officials and Attorney General William Barr</a> to discuss antitrust concerns and potential investigations. A spokesperson for Arizona’s AG noted that the meeting “involved a discussion of online platforms and a number of concerns regarding consumer protection issues raised by the states,” adding that, “[w]hile DOJ already has an antitrust review of big tech companies underway, the states are weighing all of their available options and considering possible independent courses of action.” Commenting on collaboration between the DOJ and the states, Antitrust Division head Makan Delrahim recently stated that “it would be a cooperative matter that benefits everybody, and all the states and their enforcement objectives as well as the [companies being investigated].” On September 9, the attorneys general of 48 states, the District of Columbia, and Puerto Rico announced a wide-ranging antitrust investigation of Google, initially focused on online advertising. Today, nearly every state in the United States is involved in sweeping investigations of one or more major technology companies.Congressional Investigation and HearingsIn June, the U.S. House Judiciary Committee announced a bipartisan investigation focused on competition in digital markets. As part of this investigation, on July 16, 2019, the Subcommittee on Antitrust, Commercial, and Administrative Law held a hearing with representatives from several technology companies. Committee Chairman David Cicilline set a charged tone for the hearing in his opening remarks, stating that the internet has become “increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship,” and suggesting that large technology companies are creating a “kill zone” with respect to new competition. He took the FTC and DOJ to task for not doing enough to regulate these platforms, accusing the regulators of giving the companies “de facto immunity.”Committee members questioned the companies on a range of topics, including their respective market positions; their use of terms of service and data policies; the ability of platform owners to wield market power to disadvantage rival participants and benefit their own products and services; and the targeting of nascent competitors in so-called “killer” acquisitions. The companies’ representatives responded to questions in live and written testimony, emphasizing the highly competitive, dynamic, and fragmented nature of the markets at issue and the significant procompetitive benefits stemming from their products and services. Additional Congressional hearings exploring the antitrust implications of large technology platforms will be held in September.Global Enforcement TrendsThese U.S. developments are unfolding in the context of a broader global climate of aggressive and escalating antitrust regulation of digital platforms and other technology companies. Competition authorities around the world are actively pursuing new cases, exploring novel liability theories, and reconsidering whether existing antitrust legal frameworks are equipped to regulate technology companies in the digital economy. For example, as the European Commission’s (EC) preliminary investigation of Google’s online job search tool continues, 23 rival job search engines recently sent a letter to Competition Commissioner Margrethe Vestager alleging that Google is abusing its dominance by favoring its own job search results and disadvantaging competitors. Since 2017, the EC has brought several enforcement actions against Google for abuse of dominance in online shopping, Android, and ad intermediation, resulting in over $9 billion in fines. Today, numerous competition authorities around the world are actively investigating technology companies in a wide range of areas.Political ClimateMeanwhile, in the political sphere, an increasingly vocal chorus has been calling for extreme reforms to remedy perceived harms to competition, such as <a href="https://www.nytimes.com/2019/06/26/us/politics/elizabeth-warren-break-up-amazon-facebook.html">the breakup of “Big Tech”</a> and the unwinding of consummated mergers. U.S. Senator and presidential candidate Elizabeth Warren has unveiled <a href="https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c">a sweeping plan</a> that proposes “big, structural changes to the tech sector to promote more competition . . . .” Specifically, the plan calls for legislation classifying large digital platforms as “utilities,” prohibited from simultaneously owning and participating in their platforms. In addition, the plan proposes to appoint regulators “committed to using existing tools to unwind anti-competitive mergers.” Echoing this idea, FTC Chairman Simons recently remarked that the FTC would be willing to break up major technology companies if appropriate and necessary to prevent harm to competition, noting that “[i]t’s not ideal because it’s very messy[,] . . . [b]ut if you have to you have to.”Key Insights and TakeawaysThe scope and pace of new developments in antitrust enforcement in the tech sector are dizzying. However, several key themes are emerging from these developments, foreshadowing where enforcement might be headed.<ul><li>First, a new era of antitrust regulation of technology companies is well underway in the United States and abroad. Foundational antitrust principles (e.g., reliance on the consumer welfare standard and the separation of antitrust and privacy laws) are being questioned, while drastic remedies, such as the breakup of firms, are being considered by enforcers and normalized in the political discourse.</li></ul><ul><li>Second, antitrust enforcement in this sector is gaining momentum. The foregoing developments may mark the beginning, rather than the culmination, of a long enforcement arc that could continue for many years.</li></ul><ul><li>Third, technology companies are facing scrutiny from a multitude of sources, including federal and state law enforcement authorities, competition authorities around the world, policymakers, and political figures. Antitrust has become a hot topic in the public domain, taking on a populist dimension as the media covers new developments and fuels the antitrust debate, driving further engagement by key players. As the number of actors propelling aggressive enforcement in the technology sector continues to grow, antitrust exposure increases. Moreover, the pace of enforcement is rapidly accelerating as these entities attempt to keep up with the pace of technological innovation – and one another.</li></ul>In some ways, it remains unclear where these various enforcement vectors may ultimately lead and how they might intersect (e.g., collaboration, jurisdictional tensions, divergent enforcement decisions, and/or duplicative relief). Nonetheless, it is clear that recognizing and managing antitrust risk in this environment requires understanding a complex battle being waged on multiple fronts.

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