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With States and the Feds Investigating Google and Facebook, the Legal Pressure Is Ramping Up

With the addition of new investigations by states attorneys general, both Google and Facebook are facing increasingly complex legal situations, legal experts say. 

Google is facing a joint probe by 48 U.S. states, the District of Columbia, and Puerto Rico into alleged anti-competitive practices, following a similar investigation launched by the Department of Justice in July. Meanwhile, nine states are looking into Facebook’s data-sharing practices, which the Federal Trade Commission began investigating in July. Both companies have said they are cooperating with authorities.

While it’s not unusual for states’ attorneys generals to initiate a separate inquiry, experts say the bipartisan pileup of a majority of states is rare. The move could spell a complicated resolution if the federal and state governments are gunning for different changes, legal experts told Fortune. It could also complicate how the companies are policed. 

“The nightmare for the companies is having 50 different state proceedings, which could indeed wind up commanding different results,” said Peter Carstensen, a former attorney at the antitrust division of the DOJ and a professor of law emeritus at the University of Wisconsin-Madison Law School.

In addition, there doesn’t appear to be much coordination between the federal and state authorities. That could ultimately mean the companies may have to satisfy both federal and individual states' demands for a resolution.

But legal issues involving both federal and state investigations aren't new. In 1998, 20 state attorneys general investigated Microsoft for anti-competitive practices following an earlier inquiry by the Federal Trade Commission. Though the states joined forces with the federal government to litigate, some of them didn’t agree with the settlement and worked out separate deals with the company.

“The states have jurisdiction on behalf of their citizens” said Steven Salop, an economics and law professor at Georgetown Law. “They also may have different interpretations of the facts and the law than do the DOJ or FTC.”

Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania's Law School and the Wharton School, says the states' interest in these cases is politically motivated, with both parties eager to go after the tech giants.

“It’s... not because the federal government isn’t doing enough,” Hovenkamp said. “[The states] want to get in the action too.”

But the states may also be moving in because they are worried that the federal investigators could cave to political pressure.

“The current politicized nature of the DOJ Antitrust Division—unseen in any modern administration—might make states especially leery of leaving an investigation to the DOJ," said Nancy Rose, economics department head at the Massachusetts Institute of Technology and former deputy assistant attorney general at the DOJ.

Rose says there could be reason for states to worry. The DOJ recently opened an investigation into a deal between carmakers and the state of California to improve fuel efficiency—a move skeptics say is driven by Trump. Similarly, the DOJ approved Sprint's merger with T-Mobile, which many critics said will ultimately hurt consumers. 

"With this track record, it could be rational for state AGs to think that whatever may come out of a DOJ investigation into tech firms, it would not necessarily advance competition and consumers' interests, as opposed to the President's political agenda of the moment," Rose said.

One thing seems to be clear: There’s a resurgence of interest in antitrust enforcement. Perhaps that’s because the new threat posed by larger companies is no longer solely about money, said Maurice Stucke, a professor of law at The University of Tennessee Knoxville and former prosecutor for the DOJ. 

“These data-opolies can actually pose far greater risks than the monopolies of the past,” he said. “They don’t just affect our wallets, they can affect our privacy, economies, and democracy.”

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