DC AG Racine says fighting big tech is like David vs Goliath

In his battles with Big Tech, District of Columbia Attorney General Karl Racine sees his office as something of an underdog.

“In a real way, when you take on tech, it’s David versus Goliath,” Racine said in a recent interview with CNBC in his office. “Which means you’ve got to be thorough, studied and precise. And willing to go the distance.”

Racine, who is now in his last year of office after announcing he will not seek reelection, has demonstrated his resolve in lawsuits he’s brought against companies including Amazon, Facebook, Google, and Grubhub. Still, his office has seen significant blows to several different actions against Amazon and Facebook owner Meta in recent months.

But Racine said his office plans to move ahead with each of those cases and ask the courts to reconsider. He said he’s not surprised that the tech companies would hire the most experienced lawyers to back them up and engage in a process that “grinds down smaller players and plaintiffs.” And, he said, he has faith that the courts, with a little bit of extra explanation on the particulars of their cases, will come around.

“We are willing to take on that David role,” Racine said. “And after all, I think, David won.”

Racine, the first independently-elected attorney general in D.C., sees the role of state AGs as a particularly important one in light of Congress’ slow ability to act.

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

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

Congress is currently considering a slate of competition bills aimed at the tech industry that could present serious challenges to the business models of such companies. But disagreement over the bills’ finer points, lobbying by the Big Tech companies and other congressional priorities including Russia’s war in Ukraine have kept the legislation from becoming law as of yet.

State attorneys general “have the wherewithal to act in a way that gives companies an opportunity to correct matters instantly,” Racine said. “Or we can bring matters to court, where no amount of lobbying, et cetera, 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 have the ear of the public, and we have the enforcement tools necessary to call a company to account.”

While Congress has seen its tech efforts stalled by both partisan and inter-party squabbles, state AGs have demonstrated widespread alignment on major tech issues and lawsuits, like the antitrust cases against Facebook and Google, which drew participation from the vast majority of state enforcers.

Racine attributed that cohesion to the closeness attorneys general offices can have with their constituents.

“State attorney generals are the people’s lawyers,” he said. “And when acting as the people’s lawyers, they’re doing their best work. And they do their best work by frankly, engaging and listening to the residents of their jurisdictions.”

While writing new laws is a slow-moving process, Racine acknowledged that bringing lawsuits is, too. But, he said, deterrence can be an important and more immediate result of state AG’s work.

“The opportunity for companies to be given the chance to do the right thing, which is to take a hard look at what may happen with a lawsuit, determine whether they are in fact wrong, and have them comport their conduct to the law, that whole process is one that’s often not seen in public, that is also underrated,” he said.

Racine has notched a few wins against the tech industry. He pointed to a letter he sent to Facebook along with several other state AGs in the days after the Jan. 6 insurrection at the U.S. Capitol, urging the platform to take down targeted ads of military tactical gear and weapons accessories until after the inauguration. A day later, Facebook complied.

In some cases where Racine’s office has gone so far as to file suit against the tech companies, he’s reached settlements resulting in restitution for impacted District residents.

DoorDash, for example, agreed to a $2.5 million settlement in 2020 over allegations it misled consumers about how it would allocate tips to workers. That agreement came just a couple of weeks after the company filed to go public. Out of that total, $1.5 million was set to be paid as relief to delivery workers, $750,000 to the District and $250,000 to two local charities.

More recently, Racine’s office brought suit against Grubhub, alleging the company used misleading marketing tactics, including deceiving consumers about how their purchases would benefit small restaurants during the pandemic. Grubhub has denied violating District law and pledged to defend its practices.

The D.C. office of the attorney general has recently seen some setbacks in several of its major tech cases.

First, a federal judge last summer threw out a multistate lawsuit against Facebook alleging illegal monopolization. Then, earlier this month, a District judge rejected Racine’s request to add Meta CEO Mark Zuckerberg as a named defendant in a consumer protection lawsuit stemming from the Cambridge Analytica scandal. Shortly after that, another judge threw out a suit Racine filed against Amazon, thought to be the first government antitrust suit filed against the company.

Despite the series of blows, Racine said he’s still confident in the courts.

“I think it’s really important for us to plead clear facts and then really educate the court on the law,” he said.

Part of that could be simply a function of bringing more cases under the existing statutes.

“To be quite honest with you, 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 statute. “And so in a real way, the courts are now looking at these cases for the first time. And I think that there’s going to take a little bit of learning … to familiarize the court with legal principles that it doesn’t interact with on a regular basis.”

His office plans to ask the court to reconsider its case against Amazon. Racine noted that a federal judge in Seattle allowed similar claims to move forward just days before the District court’s decision to the contrary.

Amazon didn’t provide a comment.

The coalition of states that sought to sue Facebook on antitrust grounds are appealing a federal judge’s dismissal of its lawsuit. The judge in that case claimed the states waited an unusually long period of time to bring the charges following Facebook’s acquisition of Instagram and WhatsApp years earlier. Under federal antitrust law, both federal and state enforcers are empowered to bring cases under the statutes and reserve the right to challenge mergers long after they’ve been closed.

In the case of the Cambridge Analytica-related suit, a separate judge similarly said the AG’s office waited too long to add Zuckerberg’s name to 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 was already available. He questioned the value to consumers of naming the CEO to the suit as well.

“The filing of the subsequent motion to reopen discovery after less than three months after agreeing to a final schedule for discovery smacks of almost bad faith,” the judge said, according to a court transcript of the hearing. “And so on the timing, there’s no prejudice to DC because the relief they can get is the same. The only thing it does is divert attention from the company to an individual.”

But Racine argued his office needed to collect further evidence from the company before it could feel strongly that it could prove the CEO should be held liable for allegedly violating consumer protection laws. He said Facebook’s slow walk of evidence disclosure contributed to the amount of time it took his office to determine it had the information to illustrate that conclusion.

Facebook did not provide a comment.

“We’re now contemplating bringing a separate suit against Mark Zuckerberg, which is well within the statute of limitations, because we think the evidence shows that Mr. Zuckerberg was intimately involved in the misrepresentations around retaining user privacy,” Racine said.

On the federal level, he said it makes sense for Congress to seek to update federal antitrust law to make clear the ways the tech industry is subject to those statutes.

“The Congress now has the facts to perhaps better tailor antitrust causes of action and remedies, to what we’re actually seeing on the internet,” he said.

Racine said his choice not to run for reelection was a “deeply personal” one, adding that he now has a baby boy to care for. He wouldn’t rule out another stint in government but said it’s not where his “first look” is at the moment.

He said that as a Haitian-American, he would be particularly interested in opportunities allowing him to help with issues in Haiti. He said he’s also exploring other options, including in the private sector.

Racine said he hopes his successor will “continue to stand up for D.C. residents, including most of us who use technology.” He’s endorsed Brian Schwalb, partner-in-charge of the law firm Venable’s D.C. office. Racine worked with Schwalb at the firm before his time as AG.

“It’s it’s important for us to be a check and a balance on how technology interacts with our lives, how it treats people, both fairly and unfairly, and to push it by use of the law to be a better corporate citizen on matters related to hate, misinformation, and disinformation,” Racine said. “That’s always been the role of the People’s Lawyer and I sincerely hope and believe that the next attorney general will continue that fight.”

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