FTC Demands Acquisitions From Tech Giants
The regulator is interested in purchases of small players by Google, Amazon, Apple, Facebook, Microsoft.
Suspecting possible non-competitive behavior from large tech companies, the Federal Trade Commission (FTC) said Tuesday that it had ordered Google’s Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc, and Microsoft Corp. to provide information on acquisitions that were too small to report them to antitrust authorities.
Inquiries come as the Justice Department, FTC, state attorneys general, and the House Judiciary Committee are sacking major tech platforms accused of unfairly using their influence to defend their market share or expand into neighboring markets.
Much of the criticism has focused on big deals like Facebook’s acquisition of Instagram and Amazon’s purchase of Whole Foods, but companies have also spent billions of dollars on smaller companies, dramatically reshaping the competitive landscape in emerging tech sectors..
FTC Chairman Joseph Simons said the notifications sent to Big Tech companies are for clarification, but may lead to enforcement.
«If during the investigation we see that there are transactions that are problematic … we could go back and initiate enforcement actions to process those transactions.», – said Simons.
He added that these notices are not meant to be a warning to companies, but are intended to identify areas where stronger antitrust laws are needed..
FTC will study «hundreds» acquisitions made by companies and intends to complete its research «fast», said agency representatives.
«It depends on what they do about it», – said Matt Stoller, director of research at the American Economic Freedoms Project and an ardent critic of large tech companies. «I’m not going to say it’s okay until they do something that affects power.».
FTC demands data on startup purchases by tech giants
Google, Amazon.com, Apple and Facebook did not immediately respond to Reuters requests for comment.
«We look forward to working with the FTC to answer their questions», – Microsoft spokesman said.
The agency has requested information on transactions that occurred between January 1, 2010 and December 31, 2019, and requires each company to identify transactions that are small enough to report to the FTC and the Department of Justice, which assesses mergers for antitrust compliance. legislation law.
Tech giants have come under fire from both sides of the political spectrum, and Republicans are annoyed at what they say is stifling conservative voices on social media, and Democrats are outraged by growing consolidation..
Senator Elizabeth Warren, running for president, has explicitly called on federal regulators to repeal «anti-competitive mergers», including Amazon purchases from Whole Foods and Zappos, Facebook purchases of WhatsApp and Instagram, and Google purchases of Waze, Nest and DoubleClick.
Paul Holland, general partner at Foundation Capital, says the frequent purchases of startups by big tech players have been a double-edged sword.
«They have created a real market for startups. They created a destination for them», – he said. But, he added, the limited number of potential buyers also created «oligopolistic competitive environment» for these sales.
According to S&P Global Market Intelligence, Facebook acquired dozens of companies between 2010 and 2019, including attractive purchases such as WhatsApp and Instagram, as well as small deals in ad technology, facial recognition and social analytics.
Alphabet spent $ 1 billion on an unspecified number of small acquisitions in 2019, according to securities filings. Many of them were artificial intelligence research and cloud computing services companies in which Google is trying to innovate quickly and is committed to promoting recruitment..
With the exception of a $ 3 billion purchase for headphone and streaming in 2014, Apple has mostly done small deals worth less than $ 500 million over the past decade, acquiring smaller companies working on key technologies such as augmented reality displays, camera sensors and software. artificial intelligence.
In fiscal 2019, Microsoft completed 19 small acquisitions for $ 1.6 billion, mostly in cash.
Microsoft is seeking to solidify its position in the business software market through major acquisitions such as LinkedIn for business professionals and GitHub. Following the LinkedIn purchase, which also put up offers from Salesforce Inc, Microsoft began integrating its social media data with Microsoft products such as Outlook email..