Technology

Why Silicon Valley's virus-era D.C. glow may not last

Tech companies are potentially valuable allies to the Trump administration — but also possible targets of continuing antitrust probes.

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Big tech companies like Google, Facebook and Amazon are enjoying an unexpected boost in their D.C. popularity after the White House enlisted them to use their tremendous size, reach and mastery of data to fight the coronavirus.

But those same traits continue to pose a peril for Silicon Valley's giants, who are the subjects of multiple federal antitrust probes that are nearing a critical stage despite the pandemic.

Justice Department attorneys are still forging ahead with taking sworn testimony from witnesses — though they are slowed a little by new telework requirements and other logistical hurdles the outbreak has created. DOJ, which is pursuing separate antitrust inquiries into Google, Facebook and the tech industry as a whole, hopes to bring its efforts to “fruition” by “early summer,” Attorney General William Barr said in a Wall Street Journal interview published this week.

“And by fruition, I mean decision time,” said Barr, who — as POLITICO reported this month — has taken a more active role than usual in overseeing the tech probes. Barr has previously expressed hope of wrapping up the department's investigations by the end of the year.

The Federal Trade Commission is also pursuing its own probe of complaints of alleged antitrust abuses by Facebook and possibly anticompetitive mergers by the tech giants including Amazon, Google, Apple, Facebook and Microsoft. And the House Judiciary Committee's antitrust panel still aims to release initial findings from its own probe, though it had to delay plans to release initial findings this month.

One person involved in the DOJ investigations told POLITICO that they did not expect any obstacles raised by the White House’s new alliance with the industry.

The tech antitrust probes are "a bipartisan issue," said the individual, who wasn't authorized to speak on the record about the investigations. "It's not about what the White House wants because this is not specific to Trump."

Several people involved in the DOJ's probes said they thought Barr's early-summer timing might be optimistic, however.

The White House's outreach to Silicon Valley is happening on multiple fronts, including one effort launched by President Donald Trump’s son-in-law, Jared Kushner, and a separate one by the Office of Science and Technology Policy — by all appearances with little coordination. Facebook and Google have responded by using their digital reach to deliver public health messages to Americans, while Amazon has changed its sprawling distribution network to speed up deliveries of sanitation products and medical supplies.

The industry has also broached the delicate topic of how to employ companies’ vast stores of data on hundreds of millions of Americans.

"We’re truly grateful for the efforts of tech companies in disseminating best practices and guidance for citizens online, all over the country," Vice President Mike Pence told reporters last week. "The public spiritedness that’s been reflected there is a credit to those great companies and a credit to all the dedicated Americans who work there."

From 'big, bad companies' to 'our saviors'

The friendlier vibes could have a big impact on another critical factor — Silicon Valley's much-battered public image, which after two years of data and privacy scandals has helped drive a bipartisan interest in bringing the industry to heel.

Public opinion about the major tech companies was certainly “a piece of what was driving the antitrust agencies” to open their probes, said Lisa Phelan, an attorney who spent 25 years at the DOJ’s antitrust division.

“Some pressure was coming from the public sense that these are big, bad companies,” said Phelan, now a partner at the law firm Morrison & Foerster. “Now the view is, ‘These are our saviors and we love them.’ It’s one possible scenario that their public image changes [and] that may reduce some of the pressure” to bring cases.

That change could indeed blunt the political impetus for an antitrust crackdown, some of the industry's antitrust critics acknowledge.

“The tech giants have been violating the antitrust laws for years. What was always missing was a lack of political will to enforce the antitrust laws against these companies, and those tides have turned in the last year and a half," said Sally Hubbard, director of enforcement strategy at the Open Markets Institute. "And so I definitely think if all of a sudden these companies are America's darlings again, there could be some deterioration of that political will, at least at the federal level."

But Hubbard remains bullish that state attorneys general, who opened broad, bipartisan antitrust investigations into Google and Facebook last year, will not be swayed by the companies’ coronavirus efforts. "I've always been having a lot more faith in that investigation than anything coming out of the DOJ because I've seen how politicized things have been under the Trump administration," she said.

She added that the administration’s reliance on the industry’s help for public outreach, delivery logistics and computing power proves a major criticism of the tech countries — that their economic impact and public reach makes them too large and ubiquitous to avoid.

“Anti-monopoly advocates like me have been arguing for a long time that what these companies are now is infrastructure. They're the infrastructure that the rest of the economy is dependent on,” Hubbard said. “The crisis is making that abundantly clear.”

Amazon, Apple, Facebook and Google have all denied they hold monopoly power in their respective industries, arguing that their retail, digital marketing and mobile operating businesses face constant competition. Their market leadership has been earned by creating products people enjoy, they say.

Social distancing hits antitrust investigators too

Lawyers who practice before the DOJ and FTC said business was proceeding as normal, although at a slightly sluggish pace as government employees adjust to working entirely online. In a release last week, the antitrust division said it was canceling all scheduled depositions — the in-person interviews that prosecutors use to help build their cases — and would reschedule them to take place over videoconference.

But remote depositions bring their own host of logistical and substantive challenges, said William Stallings, who worked at the antitrust division for 17 years.

“In-person is absolutely preferable,” said Stallings, now a partner at Mayer Brown. “I don’t want to say it’s impossible, but it’s incredibly, incredibly challenging to defend a deposition remotely.”

Ann O’Brien, who left the antitrust division in February after 20 years, said that “every week that people aren’t allowed to go into office, there are some things that will experience delays.”

“Key face-to-face depositions, key witness interviews may be put off,” said O’Brien, now at the firm BakerHostetler. “I think if this goes on for a long time, people will have to look at alternatives to move those forward.”

Another challenge facing the agencies is access to documents. Normally, a company submits a hard-drive to the FTC or DOJ in response to a subpoena or document request. As of last week, the agencies have asked that the documents be uploaded to a file-sharing platform hosted by the secure cloud company Accellion. That switch has led to its own difficulties as both the agencies and law firms get used to the new system.

DOJ declined to comment on how the pandemic is affecting the tech probes or whether it might change the timeline.

The FTC is looking separately at a decade's worth of small acquisitions by Apple, Amazon, Google, Facebook and Microsoft, as part of a study aimed at determining whether those kinds of deals should get tougher antitrust scrutiny.

And the House Judiciary antitrust subcommittee is pursuing its own investigation into major internet companies, though that probe will be delayed as Congress responds to the coronavirus outbreak, subcommittee Chairman David Cicilline (D-R.I.) said Thursday. The panel had been set to release its findings this month.

'Someday they should make a movie'

The shift in the White House’s tone toward Silicon Valley comes as Trump, facing the toughest challenge yet to his presidency, needs the tech industry’s help more than ever.

Kushner has led much of the outreach to tech CEOs with help from Chris Liddell, a White House deputy chief of staff and former Microsoft executive, two administration officials told POLITICO. That effort has included soliciting input from companies like Amazon, Apple and Facebook about how to ease challenges like distributing test kits, managing supply chains and disseminating public service announcements.

"Someday they should make a movie about how the private sector and the White House came together to solve this crisis, but for now we need to get back to work,” one senior administration official said.

The Office of Science and Technology Policy has been separately engaging tech company representatives on issues like removing online misinformation, and using artificial intelligence and supercomputers to analyze medical research.

Google has played an especially prominent role in the administration’s public pronouncements, including in Trump’s apparently overstated Rose Garden announcement about a coronavirus-screening project by the company’s health sciences affiliate. Google is also part of the supercomputing consortium that Trump announced Sunday, which also includes IBM, Microsoft and Amazon.

The government and private industry are also discussing how vast droves of data, by far the companies’ most valuable asset, could be leveraged to help stem the spread of the virus.

“We’re exploring ways that aggregated anonymized location information could help in the fight against Covid-19,” said a Google spokesperson, who added the company could, for instance, assist in measuring the impact of social distancing. “This work would follow our stringent privacy protocols and would not involve sharing data about any individual’s location, movement or contacts.”

Facebook, meanwhile, already helps health officials track diseases based on aggregated, anonymized data from users who have opted to share their location. But CEO Mark Zuckerberg told reporters last week that no government had asked for access to the company’s user data in response to the pandemic, adding that he would probably oppose such a step “at a high level.”

“I don't think that there are direct asks for access to people's data directly,” Zuckerberg said. “The request we’ve gotten mostly from government has largely been about helping to disseminate authoritative information and making sure that we stay on top of preventing misinformation from spreading.”

That kind of work could pay dividends in Washington once the coronavirus pandemic has ebbed.

"These are not the actions of American businesses who only care about their own benefit," said Carl Szabo, vice president of the trade association NetChoice, whose members include Facebook, Google and Amazon. "They are stepping up to do what's best for the country in a time of need, and I hope once this tumultuous period is over that we all remember that."