Press Release Platform Competition

Public Knowledge Applauds FTC for Examining Previous Big Tech Mergers

February 11, 2020 , , ,

Today, the Federal Trade Commission announced that it would investigate prior acquisitions made by five large technology firms — including Alphabet, Amazon, Apple, Facebook, and Microsoft — to determine the “terms, scope, structure, and purpose” of transactions made between Jan. 1, 2010 and Dec. 31, 2019 as part of a 6(b) study. 

As explained by the FTC, Section 6(b) of the FTC Act “authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose.” These studies enable the agency to broadly review an industry practice and compel information from witnesses. This study should educate the FTC about large technology firms’ acquisition activity, including “how these firms report their transactions to the federal antitrust agencies, and whether large tech companies are making potentially anticompetitive acquisitions.”

The following can be attributed to Charlotte Slaiman, Senior Policy Counsel at Public Knowledge:

“Among digital platforms, small firms such as the acquisitions targeted for this study can have an outsized competitive impact. There are special economic characteristics of digital platforms that make ongoing competition against them difficult. As a result, these markets are often characterized by what antitrust experts call ‘competition for monopoly,’ which means one or two firms are likely to win out and not face further competition often. For dominant platforms, buying out a small competitor with a great growth trajectory can be a very effective anticompetitive strategy and can help a large technology company maintain its monopoly.

“Although a 6(b) study will not unwind any merger, it educates the agency and the public, and can equip the agency to open future investigations. The case-by-case review process agencies use to review mergers can lead them to miss long-term trends. It’s extremely helpful for the agency to step back and examine the entire digital ecosystem. 

“We’re pleased to see the FTC conducting this study and hope the agency will examine both the result of Big Tech acquisitions as well as what might have happened if the smaller, acquired companies had never been bought out in the first place.”