States ramp up pressure on federal regulators to rein in Big Tech


States are turning up the pressure on federal regulators to police the biggest tech companies and give consumers more control over their personal data.

Attorneys general in several states have already opened or are preparing investigations into Facebook, Apple and Google over concerns about privacy and anti-competitive practices. They lobbied the Justice Department to take action last fall, and on Wednesday, they are meeting with the Federal Trade Commission in Nebraska to discuss antitrust enforcement.

In a letter to the agency sent Tuesday night, the AGs called for tougher reporting requirements for tech acquisitions and a new clearinghouse for data brokers. The letter was signed by 39 states, along with the District of Columbia, Guam and Puerto Rico.

“Each one of those companies, individually, needs to be looked at and overlaid against our consumer protection and antitrust laws to determine whether or not the activity each one is engaged in would render a breakup or not,” Louisiana Attorney General Jeff Landry, who heads the National Association of Attorneys General, told CNBC. “Whenever nascent industries come about, and they gain economic power and they gain monopolistic control over that market, we’ve seen our government come in and break those particular companies up.”

Washington is starting to take notice. The House Judiciary Committee kicked off a broad investigation into the dominance of the tech giants this week. Federal regulators have open inquiries into Facebook, Google, Apple and Amazon, according to a person familiar with the probes. And the Justice Department’s top antitrust official is pushing back against criticism that the agency has been slow to respond to a rapidly changing industry.

“The antitrust division will not shrink from the critical work of investigating and challenging anticompetitive conduct and transactions where justified,” Assistant Attorney General Makan Delrahim said in a speech Tuesday in Israel.

But state attorneys general say they are not waiting for Washington – and sometimes that puts them at odds with federal regulators. That tension was on display Tuesday when nine states and the District of Columbia joined forces in a lawsuit aimed at blocking the $26 billion merger of wireless carriers T-Mobile and Sprint, even though the DOJ is still reviewing the case.

Landry, who was not a part of the suit to stop the merger, would not comment on whether states are considering similar coordinated action around tech. But he said attorneys general should “band together” to find ways to address the dominance of Big Tech alongside federal authorities.

In the letter to the FTC, the AGs argued that the biggest players cement their positions by creating barriers to entry for smaller firms. They also urged the agency to consider factors beyond price – including quality, privacy and innovation – in assessing whether consumers are harmed by company practices.

One solution the states are calling for would force companies to disclose a potential acquisition if the firm being bought is relatively young. And companies that are settling complaints with federal authorities should be forced to seek approval before buying any other firms, the states said.

On privacy, states are seeking a new data-broker clearinghouse that would allow consumers to opt out of data collection and limits on how long companies keep user information.

“Platforms’ collection of consumer data creates privacy concerns touching on consumer protection,” the letter states. “But the scale and volume of the collection of that data also raises competition concerns.”

Landry has been one of the most vocal critics of the tech giants, telling CNBC there’s an “antitrust flavor” to Google’s advertising business and the way it handles consumer data.

In New York, Attorney General Letitia James has opened investigations just this year into Facebook over the way it handles users’ contact lists and Apple over concerns about privacy within the FaceTime app. Earlier this month, the District of Columbia won a key court ruling allowing its lawsuit against Facebook over the Cambridge Analytica scandal to proceed. Pennsylvania is looking into the massive data breach revealed by the social media giant last fall.

In California, state regulators are gearing up to enforce an online privacy law – the first in the U.S. – designed to rein in technology companies and give consumers more control of their data. Attorney General Xavier Becerra said the promise of the tech revolution – new jobs, enhanced efficiency, greater innovation – lured the federal government into treating the industry with “kid gloves.”

“They’re not children anymore. They’re adults, and they should be treated like adults,” he told CNBC. “And we’ll see where that takes us.”