FTC to review past acquisitions by tech firms

FTC to review past acquisitions by tech firms
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The Federal Trade Commission (FTC) on Tuesday announced that it is reviewing a decade's worth of acquisitions by the country's largest technology firms, allowing the agency to home in on whether companies like Facebook and Google harmed competition as they gobbled up hundreds of smaller rivals.

The agency is requesting a slew of documents from Facebook, Google, Google's parent company Alphabet, Microsoft and Amazon as it works to learn more about the "terms, scope, structure, and purpose" of the many acquisitions the companies have made since 2010. The review process will allow the FTC to probe the litany of smaller acquisitions that enabled the Big Tech firms to become global powerhouses over the past decade.

"Digital technology companies are a big part of the economy and our daily lives,” FTC Chairman Joe Simons said 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." 

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"This will help us continue to keep tech markets open and competitive, for the benefit of consumers," he said. 

Tech-focused consumer advocates for years have pressed the FTC to issue these document requests, called 6(b) orders, in an effort to force the companies to turn over information about how they amassed enormous power and influence, sometimes at the disadvantage of smaller players. The orders are compulsory and function like subpoenas.

The decision on Tuesday was unanimous, marking a moment of party unity in a commission that has often been divided over how to take on the largest technology companies. Democratic FTC Commissioner Rohit Chopra in particular has been pushing for a 6(b) study, telling a congressional panel last year that it could help the agency "get the data we need to effectively police these markets and report our findings to the public." 

In a joint statement, Chopra and Republican FTC Comissioner Christine Wilson said they "commend" the FTC for using its authority to probe technology mergers and urged the commission to launch similar studies into the tech companies' privacy and data security practices.

Google, Microsoft, Amazon and Apple did not immediately respond to The Hill's request for comment. Facebook, which previously disclosed it is under antitrust investigation by the FTC, declined to comment.

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Bill Kovacic, a former FTC chairman and current professor with the George Washington University law school, said the companies could challenge the special orders in court. But, he added, it would likely be a "fruitless battle" because the FTC's authority to subpoena documents about antitrust issues is well-established.

"I would imagine there will be some public outcry and expression of outrage, but I think [the companies] understand that going to court to try to block this probably will not be successful," Kovacic told The Hill.

The 6(b) study will allow the agency to probe the acquisitions of small companies that did not need government approval when they occurred. While the largest tech acquisitions of the past decade — like Facebook's acquisition of Instagram — have required signoff from either the FTC or the Department of Justice (DOJ), many more have flown under the radar because of a 1970s law that established a high threshold for the kind of deals that require agency approval.

On a phone call with reporters, Simons said on Tuesday that the FTC is looking into whether it needs to update its own rules around how and when tech companies should ask the government for permission to acquire smaller rivals.

Simons also said the study could ultimately "result in unwinding" any number of acquisitions the companies have made over the past 10 years if they identify malfeasance.

"We want to at least be aware of what we’ve been missing, why [these acquisitions] were not filed, and the significance of those transactions," Simons said, "and whether there’s something we need to change going forward."

Kovacic said these studies typically lay the groundwork for future legislation or law enforcement actions.

The study comes amid broader federal scrutiny of the unprecedented power and size of the Big Tech firms. Nearly every state attorney general in the country is engaged in separate investigations into Facebook and Google, and the DOJ is conducting its own tech probe, which could result in enforcement action against the prominent firms.

The House Judiciary Committee's antitrust subpanel is also nearing the end of its investigation into competition in the digital marketplace. That probe will result in a final report and potentially new legislation aimed at updating the country's antitrust laws to better take aim at the dominant tech firms.

"Today’s decision by the FTC to examine past acquisitions by dominant technology companies is an important step in correcting the decades of inaction by antitrust enforcement agencies that have led to consolidation in the digital marketplace and across almost all sectors of our economy," Rep. David CicillineDavid Nicola CicillineNadler: Barr dealings with Berman came 'awfully close to bribery' OVERNIGHT ENERGY: DOJ whistleblower says California emissions probe was 'abuse of authority' | EPA won't defend policy blocking grantees from serving on boards | Minnesota sues Exxon, others over climate change DOJ whistleblower: California emissions probe was 'abuse of authority' MORE (D-R.I.), who is leading the House investigation, said in a statement.

The FTC official leading the 6(b) study told reporters that the agency requires a response from the companies on a "fairly quick timeline."

— This report was updated at 4:11 p.m.