Missouri probe of Google may hint at troubles ahead for Big Tech

28 November 2017 4:21pm

Image credit.

17 November 2017. By Mike Swift.

When Missouri Attorney General Josh Hawley announced this week that he was opening an antitrust and privacy investigation of Google, it marked the first active publicly disclosed antitrust investigation against the search giant since Mississippi’s attorney general hit Google with a similar subpoena in 2014.

It’s far from clear whether the five-day-old Missouri investigation represents a significant regulatory risk to Google, in part because of Hawley’s political plans. But the politics of Hawley’s investigation may also highlight the deeper regulatory and political problems that Google and other big tech companies may face in the years ahead.

Even though it focuses on both privacy and antitrust questions, Hawley’s probe  appears more finely targeted than the Google investigation launched by Mississippi Attorney General Jim Hood three years ago.

But as Hood could attest, dropping an investigative subpoena on the Googleplex doesn’t mean much unless you are braced for the inevitable counter-punch from a company with virtually unlimited legal resources, and a demonstrated willingness to get down in the gutter if that’s what it takes to fight back.

Hawley is not just a regulator; he’s also a candidate for higher office. In October, the 37-year-old Republican, who was elected Missouri’s attorney general just a year ago, announced his challenge to incumbent Democratic Senator Claire McCaskill for one of Missouri’s senate seats in 2018.

In explaining his Google investigation to Missourians this week, Hawley avoided the dry abstractions of antitrust law and economics. He spoke like a populist politician appealing to voters in the heartland of the country, where economic prospects have lagged behind the coastal power centers of Washington, Wall Street and Silicon Valley.

“My office is challenging this industry Goliath because a free and fair marketplace keeps consumers safe, and more: It gives the average person with a great idea the chance to change the world,” Hawley said in an op-ed in the Kansas City Star. “I will not let the interests of powerful corporations close our economy or jeopardize consumers. We are fighting for Missourians. We are fighting for an open and fair economy. We are fighting for the consumer. Someone needs to.”

Small town boy

Hawley grew up in Lexington, a small town of about 4,700 people in central Missouri. His father was a banker; his mother, a teacher, but he has played up the farming history on his mother’s side of the family. “My family, we weren’t important people or famous people or wealthy people. We were just normal, everyday people,” he told a TV interviewer last year.

Hawley was nevertheless educated and began his career in some of the same power centers he’s challenging now as being dysfunctional and anticompetitive. He enrolled at Stanford University in 1998, within weeks of Google’s incorporation in a garage in nearby Menlo Park, California, using search engine technology co-founders Larry Page and Sergey Brin invented on the Stanford campus.

Hawley went on to law school at Yale University, and clerked for Chief Justice John Roberts in the US Supreme Court in 2007 and 2008.

Now, just a year after winning his first election and becoming the first Republican attorney general in Missouri in more than 25 years, Hawley is taking on an incumbent Democratic senator and Google. At the same time.

The eight-page civil investigative demand Hawley sent this week to Google’s headquarters in Mountain View, California included 54 questions on three topics — whether Google violated Missouri’s antitrust laws by favoring its own software products, whether Google violated Missouri consumer protection laws through its collection and potential sharing of consumer data with third parties, and whether Google illegally “scraped” content from Yelp or other websites that it used in its own search results.

In comparison, the CID Hood sent Google in 2014 was an antitrust, intellectual property and consumer protection fishing expedition. It sprawled 79 pages, and detailed 141 different questions about Google's search results, ranging from its treatment of illegal online pharmacies to pirated online movie and music content.

Hood never got his questions answered. Two months later, Google filed a complaint in federal court in Mississippi seeking to block the attorney general from enforcing his CID.

Google ultimately pursued its court battle up to the US Court of Appeals for the Fifth Circuit over the course of two years. Google also went public, accusing Hood of taking money and acting as a pawn of the movie industry, an old foe of Google and Silicon Valley.

In a Google public policy blog post, Google’s top lawyer said a trove of internal documents made public in the data breach of Sony Pictures showed that the Motion Picture Association of America had “budgeted $500,000 a year towards providing legal support” for “state prosecutors to take up the fight against [Google].”

Political Target

Missouri’s Hawley gave Google a Jan. 22 deadline to reply to his subpoena. But if Hawley is serious about his investigation, he should look to Hood’s experience and brace himself for an effort by Google, in court or on some other battleground, to avoid or delay replying to the investigation.

If Hawley is elected to the Senate next year, it’s hard to imagine the Missouri probe persisting in a court battle against Google like the one it brought against Hood in Mississippi. But that doesn’t mean Google should be relieved.

Even as a conservative Republican attorney general awaits for a corporate “Goliath” to turn over all the documents it provided to the Federal Trade Commission for the federal antitrust probe that ended in 2013, a politician on the opposite end of the political spectrum is trying to rekindle the same antitrust probe.

In a letter to the FTC  in October, US Representative Keith Ellison, a Minnesota Democrat who is the deputy chair of the Democratic National Committee, requested the same investigative antitrust records. Ellison’s deadline is Nov. 30, less than two weeks away.

“Given the impact Google has on small businesses, the flow of information, and that Google controls an outsize portion of the market for online search and online advertising, the public has a right to know what the FTC found in its investigation into Google,” Ellison wrote in the letter to acting FTC chair Maureen Ohlhausen.

The fact that a Red State conservative and a Blue State liberal used similar language to describe Google shows what a plump target the search giant has become for politicians seeking to appeal to voters on both ends of the spectrum.

Even if the specific investigations of Hawley and Ellison don’t go far, that fact hints at the troubled regulatory waters Google and other tech giants may have to navigate in the years ahead.

Joh Sung-Wook Interview