The Federal Trade Commission details how Big Tech swallows smaller competitors
The Future. The Federal Trade Commission released a new study revealing the extent of Big Tech’s domination over “little tech,” paying top dollar to eat up competitors and stifle founders with non-compete clauses. The FTC’s new chair, Lina Khan, looks to be stepping up enforcement, which may kick the trend of building startups just to sell them to a bigger competitor as an exit plan.
FTC chair Lina Khan is gearing up for battle.
- The FTC reviewed 616 M&A transactions by Apple, Amazon, Google, Facebook, and Microsoft from 2010-2019 that weren’t reported to antitrust regulators.
- A significant portion of them deferred compensation and made founders sign non-compete clauses.
- 94 of transactions were over the dollar amount that required reporting, but may have “qualified for other regulatory exemptions.”
Khan, who was sworn in earlier this year under President Biden, said that legal loopholes are “unjustifiably enabling deals to fly under the radar.” It’s hard not to imagine Khan thinking of Facebook’s acquisition of Instagram and WhatsApp (and attempts at Snapchat, Twitter, and TikTok) when it considered the companies to be “threats” to Facebook.
The FTC and 46 attorneys general sued the platform, but a federal judge threw it out, saying it lacked enough evidence and was a bit too late to the punch. The FTC has since refiled.
Additionally, Amazon (of which Khan is a fierce critic of) may run into some issues with its $8 billion acquisition of MGM, which many trade groups and Hollywood unions vehemently oppose. If Khan is unable to roll back the damage already done, she may play hardball to stop the M&A spree right in its tracks.