Corporate acquisitions by Google, Amazon, Apple, Facebook and Microsoft are to come under scrutiny as US regulators look to see if a series of tech acquisitions were “anticompetitive” and whether they need to be reported to antitrust watchdogs.
The action from the Federal Trade Commission (FTC) is framed as “research” rather than a “specific law enforcement purpose” but it will bring a regulatory microscope to acquisitions made between 2010 and 2019 that went unreported to antitrust guardians because the companies acquired were too small according to current rules.
The investigation brings attention to strategic decision-making in the big tech companies and the reasons underlying acquisitions, whether they are to integrate new technologies with high potential or if they are simply taking competitors out of the market.
The review also shifts focus on the tech busines. Much of the M&A attention generated by the tech giants stems from major acquisitions, such as Google’s recent headline-grabbing price tag of $2.1bn for Fitbit or the $19bn paid by Facebook for WhatsApp. However, the FTC’s aim is firmly fixed on smaller purchases and their implications for competition.
The five companies will have to examine each unreported acquisition and provide the same kind of information that would have been submitted had those takeovers been disclosed to competition authorities.
According to FTC chair Joe Simons, the research will help regulators work out whether they are being told about acquisitions that might affect competition.
“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,” Simons said in a statement.
“This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”
The action comes in response to a round of public hearings that ended last year in which regulators discussed whether US rules on competition and consumer protection should be reformed given the changing nature of business practices and technology.
A statement from the FTC said: “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.”
It also wants to look at the progress of small tech companies after they have been acquired by the giants.
Some news sources claim the FTC examination could look at hundreds of past acquisitions.
Google spent $2.1bn on acquisitions in 2019, up significantly on the previous year. Google has acquired up to 170 companies in the time period covered by the probe, though the larger takeovers would not be part of the current investigation having already received regulatory clearance.
Google’s latest purchases include Pointy, a Dublin-based tech start-up.
Last year multiple reports suggested the tech giants were on a buying spree to hoover up artificial intelligence start-ups. In 2018 Apple bought the AI start-up Silk Labs for an undisclosed sum.