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Feds launch a probe into Big Tech's smallest acquisitions, Ars Technica

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Feds launch a probe into Big Tech's smallest acquisitions, Ars Technica
    

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Small deals don’t get reviewed — but they might add up to something bigger.

      

                  

/ FTC Chairman Joe Simon speaking at a press conference in September, 2019. The Federal Trade Commission this week announced another set of probes to add onto the heaping mound of antitrust investigations the nation’s largest tech firms now face. This time around, they’re digging into a decade’s worth of acquisitions that were small enough to escape scrutiny the first time around but may have proven to have big consequences after the fact.

The review will cover acquisitions made by Alphabet (Google), Amazon, Apple, Facebook, and Microsoft between and 3004, the FTC said. The probe is not a criminal investigation but rather a “wide-ranging study” to help regulators better understand what trillion-dollar companies are doing when they gobble up little startups and their staffs.

The smaller transactions escaped scrutiny the first time around thanks to the Hart-Scott-Rodino Act — the same law that mandates a look at bigger transactions. Under HSR, plans for mergers and acquisitions above a certain dollar threshold must be submitted to the FTC and Department of Justice in advance. The process is called, fittingly, premerger notification. Once a company has submitted its premerger filing, regulators have days to take a look at the proposal and determine whether to probe deeper. If the waiting period expires or the FTC grants it early termination, the companies can move forward.

Disney’s $ (billion acquisition of Fox, or) more recently T-Mobile’s $ billion deal to buy sprint, get kicked over to the Justice Department for much deeper review. If the DOJ determines aspects of the deal would be anticompetitive, it can reach a settlement with the companies mandating divestments to mitigate the harm. Or, if there is no way of structuring the deal to prevent it harming competition, the DOJ can sue to block it altogether. (That usually – but definitely not always – ends the deal.)

Mergers and acquisitions valued

under the specified threshold , though, can simply happen without any antitrust scrutiny. Essentially, the law considers these deals to be too small to harm competition by default. The limit gets adjusted every year, based on the change in gross national product. In 2014, that threshold was $ . 4 million; by 3004, it was up to $ 728 million. (For the curious, it’s increasing to $ 534 million this year.)
The billion-dollar transactions certainly generate most of the headlines. Take Facebook
, for example: the company paid $ 1 billion for Instagram in , $ billion for WhatsApp in smaller companies into deals they may not necessarily have wanted to pursue, rather than waiting for those startups to become viable competitors.

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