The Federal Trade Commission has launched a lookback at some of the smaller past acquisitions by some of the largest tech companies.
The FTC said Tuesday it has issued "special orders" to Alphabet (Google), Amazon, Apple, Facebook, Google, and Microsoft, which require them to provide info on all acquisitions over the past decade (Jan. 1, 2010 and Dec. 31, 2019) that did not get an automatic antitrust review at the time.
The FTC picked those companies both because of the number of smaller transactions they have done in that time frame--"hundreds" says the FTC--as well as their size and importance to the economy.
The orders are not related to any investigation of a specific company, but are rather an effort, the FTC said, to "deepen its understanding of large technology firms’ acquisition activity, including how these firms report their transactions to the federal antitrust agencies, and whether large tech companies are making potentially anticompetitive acquisitions of nascent or potential competitors that fall below HSR [Hart Scott Rodino] filing thresholds and therefore do not need to be reported to the antitrust agencies."
Deals below a certain value--currently $84 million--don't need to be submitted to the FTC and Justice for antitrust review. The FTC revises the figure annually based on the gross national product (GNP). Plus, there are other exemptions from antitrust review for deals larger than that threshold.
But the FTC will also look at wider issues. The data drop must also include "corporate acquisition strategies, voting and board appointment agreements, agreements to hire key personnel from other companies, and post-employment covenants not to compete."
The FTC also wants info on "post-acquisition product development and pricing, including whether and how acquired assets were integrated and how acquired data has been treated."
“Digital technology companies are a big part of the economy and our daily lives,” said FTC chairman Joe Simons in a statement. “This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”
The outcome from the review could range from changing its HSR guidelines to capture more deals--it is reviewing hundreds of deals, said FTC Chairman Joseph Simons in a call with reporters--to unwinding past deals, to behavioral conditions, to no action.
The FTC wants to know what it may have missed in the digital sector by setting the antitrust bar the way it has, but also if companies have been trying to skirt the rules, though the emphasis is on the former.
Big Tech has been under a big cloud in Washington over issues including privacy, data security, censorship, immunity from liability for third-party postings, online political advertising, children's online protections and more.
The Administration had signaled it would be looking at past transactions to see whether and how its approach to Big Tech antitrust reviews might need to change.
"The FTC plays a valuable role in ensuring that consumers in America are protected from anticompetitive behavior, through advocacy, investigations and retrospective analysis," said Computer & Communications Industry Association President Matt Schruers. "It has undertaken a variety of efforts to determine what benefit consumers are receiving from competition in the digital sector, and CCIA supports retrospective analysis to better understand how the digital economy operates. We expect that the FTC will continue to pursue its mandate based on evidence and sound economic analysis."
But another tech association was not as sanguine.
"It would be one thing if the FTC truly were undertaking this examination to 'deepen its understanding' of the competitive implications of tech acquisitions in order to better inform future merger reviews," said Information Technology and Innovation Foundation (ITIF) President Robert D. Atkinson, "but it is deeply concerning that the Commission has indicated this may be a fishing expedition that leads it to retroactively split up companies that have already merged. This risks chilling innovation in the entire technology sector by casting generalized suspicion on common entrepreneurial pathways and business practices that are critical for spurring it."