Will the FTC redefine anticompetitive behavior after its big tech acquisition inquiry?
Big tech is on notice. Yesterday, the Federal Trade Commission (FTC) ordered five large technology companies — Alphabet, Amazon, Apple, Facebook and Microsoft — to provide details on past acquisitions of small firms that were not previously provided to the government because the deals were too small to be covered under the Hart-Scott-Rodino Act.
The government is looking to see if the tech giants have made “potentially anticompetitive acquisitions of nascent or potential competitors.” The FTC has said that its objective is not to find specific violations, even though officials acknowledge that it could happen. More so, the FTC wants to determine if it needs to make rule changes going forward.
In addition to identifying acquisitions not previously reported to the government, the FTC is asking the tech companies to provide information and documents related to their individual corporate acquisition strategies, voting and board member agreements, agreements on key personnel hired from other companies and post-employment agreements.
Specifically related to acquisitions, the FTC wants the tech giants to disclose what happened to smaller firms after they were acquired. The agency has asked for details on product development, pricing, how acquired assets were used and how data obtained through acquisitions was treated.
“Digital technology companies are a big part of the economy and our daily lives,” said Joe Simons, chairman of the FTC, in a statement. “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. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”
DISCUSSION QUESTIONS: Do you think anticompetitive behavior in the technology sector is having negative effects on retailers and consumer brands? Is current governmental oversight and regulation capable of policing anticompetitive behavior in the technology sector?