Do Big Tech Companies Stifle Competition? Federal Trade Commission To Study Question

The Federal Trade Commission voted unanimously Tuesday to examine past acquisitions by big tech firms that were not reported to the government before the deals were finalized. Such deals would have involved small companies like startups that did not meet antitrust thresholds.

The FTC order comes amid calls from several lawmakers to break up the big tech companies, a Justice Department investigation into whether the big tech firms stifle competition and a joint antitrust investigation by a group of state attorneys general.

The FTC said it had sent orders requiring Google parent Alphabet (GOOG), Amazon (AMZN), Apple (APPL), Facebook (FB) and Microsoft (MSFT) to provide “information and documents on the terms, scope, structure and purpose of transactions that each company consummated between Jan. 1, 2010, and Dec. 31, 2019.”

The action was taken under the Hart-Scott-Rodino Act, which authorizes the FTC to conduct studies that don’t have a specific law enforcement purpose. The FTC said it wants to deepen its understanding of acquisition activity among large tech firms and examine whether the activity harms competition.

“This initiative will enable the commission … to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition,” FTC Chairman Joe Simons said. “This will help us continue to keep tech markets open and competitive for the benefit of consumers.”

The FTC is seeking documents related to corporate acquisition strategies, voting and board appointment agreements, decisions on hiring key personnel, post-employment noncompete agreements, and post-acquisition product development and pricing, including information on how the companies were integrated into the overall operation.

“The commission plans to use the information obtained in this study to examine trends in acquisitions and the structure of deals, including whether acquisitions not subject to HSR notification might have raised competitive concerns, and the nature and extent of other agreements that may restrict competition,” the FTC said in its press release. “The commission also seeks to learn more about how small firms perform after they are acquired by large technology firms.”