Crime in the Suites An Analysis of Current Issues in White Collar Defense

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How One Simple Meeting Presages the Future of Federal Prosecution
September 28, 2018

How One Simple Meeting Presages the Future of Federal Prosecution

By: James Trusty

For many years, it has been the federal government, with its multitude of prosecutorial and regulatory arms, that has been able to throw its policing weight around, causing business owners to snap to attention with a crisp salute.  But as the traditional business model has morphed into clouds of technology-driven, international and multinational enterprises, this “cop” may have met his match.

Amidst all of the Mueller probe, Rosenstein White House walks and Judge Kavanaugh drama there was a little-reported, but potentially blockbuster, meeting that took place in the nation’s capital.  On Tuesday, Attorney General Jeff Sessions and a group of state Attorneys General met to discuss their issues with Silicon Valley.  The topics of the meeting almost perfectly reflect the daunting issues facing law enforcement in a world of multinational, web-dependent, corporate goliaths.

It appears that AG Sessions was frustrated by reports that industry giants like Google and Twitter, for example, are suppressing or at least incidentally excluding conservative speech on what traditionally has been viewed as content-neutral forums.  Free Speech protection, of course, is a 1st Amendment concept that protects individuals from state actors, and traditionally, conservatives would place their faith in the free-market system before settling on regulating private entities.  The tension, of course, is due to the fact that today’s tech corporations are so ubiquitous, and so ingrained in the daily communication of so many Americans, that their power simply dwarfs the government in every pertinent way.  This new challenge, to strike a balance between free-market capitalism and corporate domination of political opinion, is not going away anytime soon.

The State Attorney Generals present at this meeting raised a couple of primary concerns, including data protection and anti-trust enforcement.  The first of these concerns, the safeguarding of consumer personal information by corporations, is fast becoming the legal hot potato of our generation.  Corporations are increasingly aware of their need to protect customer privacy, dictated abroad by such laws as the GDPR framework but largely enforced here by jackpot litigation brought by ever-watchful attorneys.  The Corporations know they have responsibilities to protect the data and to report hacks or other breaches of privacy, but they have also seen the occasionally devastating effect on publicly-held companies when they self-report the virtual equivalent of a broken file cabinet drawer.  State and Federal investigations remain haphazard and dependent on corporate compliance with limited ability to help prevent the breaches in the first place.

The second issue raised by the State AG’s, seemingly as a call to the federal prosecutors to take control, was whether anti-trust laws should or could be wielded by DOJ against entities like Twitter, Google, and Amazon.  This concept implicates an increasingly thorny issue – is the federal toolbox, including laws drafted in the last century to stop brick-and-mortar business owners from colluding with each other, a viable option against massive, multi-national, web-based entities with values and wealth exceeding those of many countries?  Whatever the underlying motivation and even if a case is appropriate in the abstract, when prosecutions try to use old square pegs to fill round holes, they may learn the hard way that “too big to fail” has been replaced by “too complex to fight.” 

As prosecuting authorities try to drill down on the liability of these sprawling international entities, do not be surprised if promises of bold enforcement action whittle down to pleas for self-reporting, with promises of leniency like DOJ employs in FCPA matters.  When the cop looks up to a menacing 10-foot giant, sometimes the best he can do is ask politely.