F.T.C. Broadens Review of Tech Giants, Homing In on Their Deals

By Cecilia Kang and David McCabe

The agency ordered Amazon, Apple, Facebook, Alphabet and Microsoft to turn over a decade’s worth of information on small acquisitions.

The Federal Trade Commission chairman, Joseph Simons, in Washington.
The Federal Trade Commission chairman, Joseph Simons, in Washington.Credit...Anna Moneymaker/The New York Times

By Cecilia Kang and

WASHINGTON — The Federal Trade Commission said on Tuesday that it had ordered Amazon, Apple, Facebook, Google’s parent company and Microsoft to turn over information about past acquisitions, broadening its review of the power of big tech companies.

The F.T.C. said it had requested information about hundreds of smaller deals made by the five tech companies over the past decade that weren’t required to be reported to regulators by law and could provide insights into antitrust abuses. Facebook, Google (whose parent company is Alphabet) and others have scooped up dozens of smaller tech firms over the years, many of them for less than $100 million.

“If during this study we see transactions that were problematic, all our options are on the table and it is conceivable we can initiate enforcement action with those deals,” Joseph J. Simons, the F.T.C. chairman, said in a call with reporters. He added that the orders for information were separate from the F.T.C.’s continuing antitrust investigations into big tech companies but could inform the inquiries.

The actions escalate the scrutiny in Washington of the nation’s largest technology companies. The Justice Department, Congress and state attorneys general are also examining whether Apple, Amazon and others acted in an anticompetitive manner in many different areas. Lawmakers have united around the issue, in a rare show of bipartisanship.

In examining the smaller deals, the F.T.C. signaled it was looking specifically into a tech industry practice known as “killer acquisitions,” which smaller rivals have said was used to choke off competition. Under that strategy, the large tech companies buy a nascent competitor to protect their dominance and prevent the smaller company from growing into a bigger threat.

“The concern is that there were hundreds of acquisitions by big companies like Facebook and Google that were intended to nip in the bud the firms that might have ended up being important competitors and innovators that could have changed the paradigm,” said A. Douglas Melamed, a professor at Stanford Law School and former antitrust official at the Justice Department.

The F.T.C. has made similar demands for information from the pharmaceutical and retail industries to explore how companies used pricing and ad strategies, for example, to harm consumers. But the request for information about past tech mergers was the first by the agency for Silicon Valley giants.

Notably, the F.T.C. mentioned in its announcement that it had asked for information from Microsoft. While Amazon, Apple, Facebook and Google have been under scrutiny by regulators since last year, Microsoft — which battled and settled an antitrust case in the late 1990s — had appeared to escape most of the current backlash.

Amazon, Facebook, Apple and Google declined to comment. A spokesman for Microsoft said the company looked forward to “working with the F.T.C. to answer their questions.” The companies could file motions to quash the F.T.C.’s requests.

“Google didn’t invent YouTube. Facebook didn’t invent Instagram. And the list goes on and on,” Rohit Chopra, an F.T.C. commissioner and a Democrat, said in a tweet that referred to past acquisitions by Google and Facebook. “That’s why I voted to order @Google, @Facebook, @Amazon, @Apple, & @Microsoft to hand over a decade of records about their buying binge.”

The F.T.C.’s requests could generate a voluminous quantity of information.

In a sample order posted by the agency, it asked for internal documents related to the deals — including analyses presented to top executives and the minutes of board meetings where the acquisitions were discussed. It asked questions about whether certain purchases were a “data acquisition” and about which venture capitalists and angel investors had stakes in the smaller companies.

The F.T.C. also said in its announcement that it would look at “agreements to hire key personnel from other companies.” Silicon Valley companies are known to buy other, smaller firms as a way of bringing in key talent — a practice known as “acqui-hiring.”

The announcement immediately cast a pall over the stocks of the large tech companies. The tech-heavy Nasdaq composite curtailed its gains on Tuesday, though it remained in positive territory. Facebook and Microsoft were particularly hard hit.

In a statement, Representative David Cicilline, a Rhode Island Democrat who is leading the House Judiciary Committee’s inquiry into the tech giants, said the F.T.C.’s order was an “important step in correcting the decades of inaction by antitrust enforcement agencies that have led to consolidation in the digital marketplace.”

Last month, executives of small companies like Sonos and PopSockets told members of the House committee that tech behemoths like Google and Amazon had harmed their businesses.

The Justice Department plans to hold a series of public discussions in Silicon Valley this week with venture capitalists. Panels at the event will focus on so-called kill zones — when the dominance of one company renders attempts to start a competing firm useless — and on investing in markets dominated by major internet platforms.

The broad range of interests by regulators highlights the issues facing the technology companies, said Diana Moss, president of the American Antitrust Institute, a progressive think tank.

“Other than the massive trusts of the late 1900s, I don’t think antitrust enforcers have had to deal with the kind of strategic motivation for M&A that the tech platforms appear to have,” she said.