FTC plans to probe major tech firms' acquisition strategies
The US Federal Trade Commission on Tuesday ordered five major tech firms to hand over information related to their acquisitions over the past decade, as well as information related to their corporate acquisition strategies. Specifically, the FTC is looking for information from Alphabet (Google's parent company), Amazon, Apple, Facebook and Microsoft related to acquisitions that were too small at the time to require review from federal antitrust agencies. The FTC plans to review acquisitions that closed between Jan. 1, 2010 and Dec. 31, 2019.
With this information, the agency plans to study trends in acquisitions and whether these deals led to competitive concerns. It also aims to learn more about how small firms perform after they've been acquired by large tech firms.
The new probe is part of a larger effort at the FTC, and within the US government more broadly, to examine potentially anti-competitive practices within the tech industry. Last year, the FTC launched a task force specifically to monitor the US tech industry and markets for online advertising, social networking, mobile operating systems and apps, and platform businesses.
"Digital technology companies are a big part of the economy and our daily lives," FTC Chairman Joe Simons said 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."
Under the Hart-Scott-Rodino (HSR) Act, companies are required to report effectively any deal that is valued at more than $90 million to the FTC and the Justice Department. The agencies can take legal action to block any deals they believe would substantially lessen competition. With this new study, the FTC will consider whether additional transactions should be subject to pre-merger review.
The FTC has ordered the five tech companies to hand over information and documents similar to what's reviewed under the HSR Act, as well as information and documents on their corporate acquisition strategies, voting and board appointment agreements, agreements to hire key personnel from other companies, and post-employment covenants not to compete. The agency also asked for information related to post-acquisition product development and pricing.
US technology firms are the subject of multiple, ongoing antitrust investigations, as regulators grapple with the growing size and influence of US tech giants. In September, attorneys general from 50 US states and territories launched a preliminary antitrust investigation into Google. Meanwhile, the US Department of Justice (DoJ) in July launched a sweeping antitrust review into the industry's competitive conditions. In Congress, the House antitrust subcommittee's investigation into the tech industry has both Demoratic and Republican support.