US antitrust regulators eyeing Big Tech’s little startups buys

The FTC heard from a study into acquisitions of over 600 startups by the tech titans between 2010-2019.
17 September 2021

Then-Amazon CEO Jeff Bezos testifies via video conference during the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing on Online Platforms and Market Power last year. (Photo by POOL / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

US antitrust regulators signaled earlier this week that greater scrutiny of US ‘Big Tech’ giants’ acquisitions of smaller startups was possible — a potential new avenue in efforts to curb the dominance of the companies.

Google’s parent Alphabet, Amazon, Apple, Facebook, and Microsoft have carried out hundreds of deals in recent years, involving startups with terms that were too small to be reported to authorities for approval, the US Federal Trade Commission (FTC) heard at its meeting.

Commissioner Rebecca Slaughter said regulators need this type of broader perspective, and that reviewing acquisitions individually was insufficient. “I think of serial acquisitions as a Pac-Man strategy: each individual merger, viewed independently, may not seem to have a significant impact,” her prepared comments said. “The collective impact of hundreds of smaller acquisitions can lead to a monopolistic behemoth.”

She spoke as the commission heard findings from a study launched in February 2020 into acquisitions of over 600 startups by the tech titans from between 2010 and 2019, some of which were below the threshold for reporting. Appointments to the FTC and the Department of Justice in US President Joe Biden’s administration have signaled ramped up anti-trust enforcement, amid calls by some to break up some of the biggest and most successful Big Tech firms.

FTC has filed suit against Facebook, alleging it used “anticompetitive acquisitions” of potential rivals such as Instagram and WhatsApp to protect its dominance. Additionally, the Justice Department’s antitrust division said it is working with the commission to carefully review its guidelines on “harmful mergers” such as big firms gobbling up small operators in markets.

“The Department of Justice is conducting a careful review of the Horizontal Merger Guidelines and the Vertical Merger Guidelines to ensure they are appropriately skeptical of harmful mergers,” acting attorney general Richard Powers said in a release.

FTC chair Lina Khan noted Big Tech companies have devoted “tremendous resources” on acquisitions that are “largely outside of our purview.” “This study underscores the need for us to closely examine reporting requirements[…] and to identify areas where the FTC may have created loopholes that are unjustifiably enabling deals to fly under the radar.”

Facebook in July filed a formal request calling for the recusal of Khan in any antitrust action against the social media giant, arguing that she is biased and cannot rule impartially. The move follows a similar request from Amazon in anticipation of a wave of antitrust enforcement action against Big Tech firms from the regulatory agency under its leader appointed by Biden.

Large tech enterprises have often been criticized for their lack of fair comparison of competitor’s offerings. Whenever a new player emerges, they tend to launch a takeover bid and attempt to buy over the company. Facebook was one of the large organizations often criticized for buying over social media startups to reduce the competition for their erstwhile platform. This included the purchase of messaging application WhatsApp, and the social media photo and video app, Instagram.