retail news in context, analysis with attitude

The Federal Trade Commission (FTC) yesterday announced that it plans to review acquisitions made by Amazon, Facebook, Apple, Microsoft, and Alphabet/Google over the past decade, with Axios writing that it is seeking "to learn whether large tech companies are buying up small potential competitors in an anticompetitive manner."

At least some of these acquisitions were not subject to antitrust scrutiny, the story says.  The Wall Street Journal writes that "the new probe likely will involve hundreds of transactions that never drew federal scrutiny because they were under the dollar-value threshold for antitrust review, which is edging up to $94 million this year … The FTC also is looking at deals that don’t involve full-fledged takeovers. That will involve examining potential competitive impacts of minority investments, as well as data acquisitions and licensing arrangements."

The move appears to be what the Journal calls "a significant expansion of the government’s already extensive examination of possible antitrust concerns in digital markets. Both the FTC and the Justice Department have been conducting antitrust investigations of tech giants including business practices at Google and Facebook."

The Journal notes that "critics contend acquisitions by big tech firms show a pattern of establishing 'kill zones' around themselves to prevent upstart rivals from posing a competitive threat, and say this can discourage innovation and investment.

"Defenders of the tech giants say a small startup’s prospect of being taken over by a major company—and the big payoff that can result—is a spur to investment and innovation. Many tech entrepreneurs start companies with the specific goal of being bought by one of the giants."

KC's View:

It does not appear that there will be a broad effort to unravel previous acquisitions, though I wouldn't be surprised if the FTC or the Justice Department take a shot at one or two.  It might not even be a matter of politics - this probe is being initiated by the Trump administration, but also is supported by the likes of Sen. Richard Blumenthal (D-Connecticut), a frequent critic of big tech.

I agree with one of the assessments made in the Journal story, that it is "hard to see an antitrust case against major tech companies snapping up small, unproven businesses so they can hire engineers well-versed in cutting-edge technology."   Not only do such deals often give extended life and resources to these small businesses, but they are usually sought by them … it is one of the reasons they go into business to begin with.