DC AG Racine says fighting Big Tech is like David versus Goliath

Washington, DC Attorney General Karl Racine speaks after a news conference before the US Supreme Court September 9, 2019 in Washington, DC.

Alex Wang

In his struggles with Big Tech, District Attorney General Karl Racine sees his office as something of an outsider.

“Actually, it’s David versus Goliath when you’re dealing with tech,” Racine said in a recent interview with CNBC at his office. “That means you have to be thorough, studied and precise. And be willing to go the distance.”

Racine, who is now in his final year in office after announcing he will not be re-elected, has demonstrated his resolve in lawsuits he has filed against companies including Amazon, Facebook, Google and Grubhub. Still, his office has suffered significant setbacks in several different actions against Amazon and Facebook owner Meta in recent months.

But Racine said his office plans to proceed with each of those cases and ask the courts to reconsider. He said he wasn’t surprised the tech companies would hire the most experienced attorneys to assist them and engage in a process that “wears down smaller players and plaintiffs.” And, he said, he trusts the courts will come up with a little extra explanation on the specifics of their cases.

“We’re ready to take on that David role,” Racine said. “And I think David finally won.”

The role of state corporations

(LR) Washington, DC Attorney General Karl Racine (L) speaks as Arkansas Attorney General Leslie Rutledge and Texas Attorney General Ken Paxton listens during a news conference before the US Supreme Court September 9, 2019 in Washington, DC.

Alex Wang

Racine, DC’s first independently elected Attorney General, sees a particularly important role for state corporations given Congress’ slow pace of action.

When he was first elected in 2014, he didn’t expect that taking over the tech industry would be as big a pillar of his work as it has become. But he quickly realized that his office was uniquely positioned for the job.

“We knew the state AG, including our office, had a role to play because we were aware of the paralysis in Congress and the growing concentration of power,” said Racine, who was also recently president of the National Association of Attorneys General.

Congress is currently considering a series of competition laws aimed at the technology industry that could pose serious challenges to the business models of such companies. But disagreements over the intricacies of the bills, lobbying by big tech companies, and other congressional priorities, including Russia’s war in Ukraine, have so far prevented the legislation from becoming law.

Attorneys general “have the tools to act in ways that allow companies to rectify matters immediately,” Racine said. “Or we can take matters to court where no amount of lobbying etc. can interfere with the court’s judicial responsibility to determine whether the law has been broken. I think that’s why AGs are active. It’s because we’re listening publicly, and we have the enforcement tools needed to hold a company accountable.”

While Congress has seen its tech efforts bogged down by both bipartisan and bipartisan bickering, state AGs have shown widespread focus on key technical issues and lawsuits, such as the Facebook and Google antitrust cases, in which the vast majority of the state enforcers involved.

Racine attributed this cohesion to the proximity of the attorney general’s offices to their constituents.

“Attorneys general are the advocates of the people,” he said. “And when they act as advocates for the people, they do their best work. And they do their best work by openly involving and listening to residents in their jurisdictions.”

While writing new legislation is a slow process, Racine acknowledged that filing lawsuits is, too. But, he said, deterrence may be an important and more immediate outcome of the work of the state corporation.

“The ability for companies to do the right thing, which is to look closely at what can happen with a lawsuit, determine if they are indeed wrong, and get them to compare their behavior to the law, which is the whole process one that is often not seen in public, which is also underestimated,” he said.

Racine has had quite a few wins against the tech industry. He cited a letter he sent along with several other state corporations to Facebook in the days after the Jan. 6 riot in the U.S. Capitol, urging the platform to continue running targeted ads for military tactical gear and weapons accessories until after the disable inauguration. A day later, Facebook followed.

In some cases, where Racine’s office has gone so far as to file lawsuits against the tech companies, he has reached settlements that have resulted in compensation for affected district residents.

DoorDash, for example, agreed to a $2.5 million settlement in 2020 over claims it misled consumers about how it would assign tips to workers. That agreement came just a few weeks after the company filed for an IPO. Of that amount, $1.5 million was to be paid to relief workers, $750,000 to the district, and $250,000 to two local charities.

More recently, Racine’s office has filed a lawsuit against Grubhub, alleging that the company used deceptive marketing tactics, including misleading consumers about how small restaurants would benefit from their purchases during the pandemic. Grubhub has denied violating the district law and has pledged to defend its practices.

Setbacks in court cases

The DC Attorney General’s office has recently experienced some setbacks in several of its big tech cases.

First, last summer a federal judge dismissed a multi-state lawsuit against Facebook over alleged illegal monopoly. Then, earlier this month, a district judge denied Racine’s request to add Meta CEO Mark Zuckerberg as a named defendant in a consumer protection lawsuit over the Cambridge Analytica scandal. Shortly thereafter, another judge dismissed a lawsuit Racine filed against Amazon in what is believed to be the government’s first antitrust lawsuit against the company.

Despite the series of punches, Racine said he still feels confident in court.

“I think it’s really important that we get clear facts and then really educate the court about the law,” he said.

Part of this could simply be a function of bringing more cases under the existing laws.

“To be perfectly honest, there haven’t been many antitrust cases in the District of Columbia,” Racine said. His lawsuit against Amazon, for example, was brought under the district’s antitrust law. “And so the courts are actually looking at these cases now for the first time. And I think it takes a little learning … to familiarize the court with principles of law that it doesn’t interact with on a regular basis.”

His office plans to ask the court to reconsider his case against Amazon. Racine noted that a federal judge in Seattle admitted similar lawsuits just days before the district court ruled to the contrary.

Amazon has not commented.

The coalition of states that planned to sue Facebook on antitrust grounds is appealing a federal judge’s dismissal of its lawsuit. The judge in that case claimed states waited an unusually long time to bring charges following Facebook’s acquisition of Instagram and WhatsApp years ago. Under federal antitrust laws, both federal and state enforcers have the power to bring cases under the law and reserve the right to challenge mergers long after they are complete.

In the case of the Cambridge Analytica-related lawsuit, another judge similarly said the AG’s office waited too long to include Zuckerberg’s name in the complaint. District of Columbia Superior Court Judge Maurice Ross criticized the AG’s office for waiting so long to name Zuckerberg, saying much of the information needed to do so is already available. He questioned the value to consumers of also naming the CEO for the lawsuit.

“The filing of the subsequent request for a retrial less than three months after agreeing on a final timeline for the investigation almost smacks of bad faith,” the judge said, according to court transcripts of the hearing. “And in terms of timing, there’s no bias for DC because the relief they can get is the same. All it does is draw attention from the company to a person.”

But Racine argued his office needed to gather more evidence from the company before it could be confident it could prove the CEO should be held liable for alleged violations of consumer protection laws. He said Facebook’s slow path of disclosing evidence contributed to the fact that it took his office so long to determine that it had the information to illustrate that conclusion.

Facebook has not commented.

“We are now considering filing a separate lawsuit against Mark Zuckerberg, which is within the statute of limitations, because we believe the evidence shows that Mr. Zuckerberg was intimately involved in the misrepresentation to protect user privacy,” Racine said.

At the federal level, he said it makes sense for Congress to seek to update federal antitrust laws to clarify how the technology industry is governed by those laws.

“Congress now has the facts to perhaps better align antitrust claims and remedies with what we actually see on the internet,” he said.

What’s next

Racine said his decision not to run for re-election was a “deeply personal one,” adding that he now has a little boy to take care of. He would not rule out another term in government but said it was not his “first look” at the moment.

He said that as a Haitian, he was particularly interested in opportunities that would allow him to help with problems in Haiti. He said he was looking at other options, including in the private sector.

Racine said he hopes his successor will “continue to be a champion for DC residents, including most of us who use technology.” He supports Brian Schwalb, the responsible partner of the law firm Venable in DC. Racine worked at the company prior to his time as an AG at Schwalb.

“It’s important for us to control and balance how technology interacts with our lives, how it treats people fairly and unfairly, and through the use of the law, to empower them to be a better corporate citizen on matters related to it Hate, disinformation and disinformation,” Racine said. “That has always been the role of the Ombudsman and I sincerely hope and believe that the next Attorney General will continue that fight.”

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https://www.cnbc.com/2022/04/02/dc-ag-racine-says-fighting-big-tech-is-like-david-vs-goliath.html DC AG Racine says fighting Big Tech is like David versus Goliath

Chrissy Callahan

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