February 12, 2020

FTC to conduct Antitrust investigation into Big Tech Companies

[ by Kavita Krishnan ]


In a move aimed at determining how tech giants like Amazon and Facebook have used acquisitions to become hugely dominant, the antitrust officials of the Federal Trade Commission in the United States (US) have ordered the country’s big tech companies to disclose a decade’s worth of information on their acquisitions of fledgling firms.

The Federal Trade Commission (FTC) orders were sent to Inc, Apple Inc, Facebook Inc, Microsoft Corporation, and Alphabet Inc – Google’s parent company, requiring these companies to produce documents and information on the terms, scope, structure, and purpose of transactions that each company accomplished between January 1, 2010 and December 31, 2019.

The FTC sought to determine if these companies were making potentially anticompetitive acquisitions of nascent or potential competitors. As of now, the FTC doesn’t require these tech giants to seek approval of small acquisitions in advance.

The FTC also seeks to determine whether current FTC requirements for companies to seek pre-approval for a merger or acquisition are sufficient. The study would also determine whether any of the tech giants are eluding the FTC set rules. It is to be noted that the FTC has the authority to break up past deals when necessary.

Although the reason behind the inquiries is unknown, it is said to assist the FTC in getting a deep understanding of the technology giants’ acquisition activities, and whether these tech companies are making potentially anticompetitive acquisitions of nascent or potential competitors.

The wide-reaching request of these company’s acquisition strategies comes amid a broader reckoning for Big Tech, whose size, power, and business practices are increasingly being scrutinized by politicians and activists, as well as by the FTC and Department of Justice — each of which is conducting antitrust probes of several tech giants.

The FTC and the Department of Justice (DOJ) have been criticized for not doing enough to curb the growth of the tech giants and the resulting power disparity between them and industry rivals. However, the FTC and DOJ have been reviewing past major technology deals such as Facebook acquisition of Instagram and WhatsApp that cleared antitrust hurdles.

According to the FTC it is going to use the answers to look into whether there are competition issues, and if the acquisitions were done in an attempt to squash potential rivals. It also wants to examine how the smaller companies operated post-acquisition.

According to FTC Chairman Joseph Simons, the initiative will enable the FTC to take a deep study at acquisitions in this Big Tech sector, and also to evaluate whether the federal agencies are updated of the transactions that might harm competition that will help continue to keep tech markets open and competitive, for the benefit of consumers.

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