As I'm reading it the FTC is not interested in rehashing previous acquisitions that were vetted and approved by regulatory agencies. I think the inquiry involves those smaller company purchases that haven't previously required review and tend to fly under the radar. The FTC absolutely wants a report on every one of those, and detailed as tho it was a purchase that would have fallen under the Hart–Scott–Rodino Antitrust Improvements (HSR) Act. They also want to understand what happens to those companies after the purchase.
At the moment they don't want to look at something like Beats which already passed muster, but stuff like Xnor and InVisage and any of the other 50+ company purchases a tech like Apple makes each year but rarely acknowledges. The concerns have to do with how those buyouts and acqui-hires are impacting the marketplace and limiting the ability of smaller and/or and startup companies to compete with the big boys.
To your point, I suspect this is coming about due to some of Apple's small Acquisitions they made and then turned around and shut supply of part or tech to competitors. Apple has been doing this for a long time, if you think about it, it was good strategy. Buy the company before it gets too big and too many competitors begin using the tech. This also keeps some tech out of competitors hands for a long time. Apple did this for years then google and others start doing the same thing since they all lost on big acquisitions. This is why the FTC is look at all of this now.
Apple did this with the touch ID tech, and they did it with PA semi, problem with PA semi one of their big customers were Government contractors who used their chips in Military programs. Apple said they would continue to sell to those companies for time being, however, I suspect those company files a National Security Claim with Apple and Apple is still supply parts to those company today.
The government can not go back on the vetted big acquisitions since those require input from the market at large if the acquisition posed any hardships or antitrust issues. Anyone and everyone can fill a claim with the FTC before the deal is closed. If someone does not they loose their right later to say the acquisition was an issue.
I was wondering when this was all going to come home to roost. Something happen that caught the FCT attention, The real issue is when the EU will jump on this and you know they will especially is they can extract a fine.
mike1 said: I wonder how many of those companies were started and existed just to get to the point where they could be bought up by the "big boys". Ka-ching!
They would have had to have some products/ideas of value first.
If their ideas weren’t valuable they wouldn’t have been purchased.
The question is whether a startup that wants to be sold to a bigger fish means the act is “anti-competitive”. Not convinced.
The FTC isn't convinced either... yet. That's one of the points this inquiry is meant to examine.
EDIT: The Information made this observation:
"One scenario that is likely of most concern to the agency is when big companies shut down smaller ones that they have purchased simply to snuff out a potential competitor. That’s in contrast to startups acquired simply for their talent—what are called “acqui-hires”—or those that flourish into much bigger phenomena (think YouTube, Instagram and WhatsApp).
Facebook, for example, has shuttered a number of apps that it acquired, though no company in its right mind would ever admit to doing so to kill competition. In one of those cases, Facebook acquired a polling app called TBH in 2017 and shut it down several months later. Shortly after the acquisition was announced, the technology blogger Ben Thompson argued that antitrust regulators should step up to examine its competitive effects and perhaps even block the deal.
The FTC on Tuesday said it is seeking “to learn more about how small firms perform after they are acquired by large technology firms.”
I do not disagree that companies buy competitors or what they see as competitor only to shut them down. This has been going on for a long time, this is nothing new.
On the flip side of this, many of these companies/individuals create a product or service only to be bought out. They never had any intention of going it alone and competing. Add in the fact some of these companies have investors who sole exist strategy of investing in a company is to sell it out at some point and do not care if it survives pass the sale. Lastly, if the companies owners though they had something of real value they do not need to sell. Remember Steve told Mark Z not to sell or split his stock since he had something of value. It is not the government job to get in the middle of these kinds of transactions. The down side of the government trying to play police with these kinds of deals means lots of companies will never start up since Investors will not put their money at risk if they can not sale to exit the investment.
Comments
Apple did this with the touch ID tech, and they did it with PA semi, problem with PA semi one of their big customers were Government contractors who used their chips in Military programs. Apple said they would continue to sell to those companies for time being, however, I suspect those company files a National Security Claim with Apple and Apple is still supply parts to those company today.
The government can not go back on the vetted big acquisitions since those require input from the market at large if the acquisition posed any hardships or antitrust issues. Anyone and everyone can fill a claim with the FTC before the deal is closed. If someone does not they loose their right later to say the acquisition was an issue.
I was wondering when this was all going to come home to roost. Something happen that caught the FCT attention, The real issue is when the EU will jump on this and you know they will especially is they can extract a fine.
I do not disagree that companies buy competitors or what they see as competitor only to shut them down. This has been going on for a long time, this is nothing new.
On the flip side of this, many of these companies/individuals create a product or service only to be bought out. They never had any intention of going it alone and competing. Add in the fact some of these companies have investors who sole exist strategy of investing in a company is to sell it out at some point and do not care if it survives pass the sale. Lastly, if the companies owners though they had something of real value they do not need to sell. Remember Steve told Mark Z not to sell or split his stock since he had something of value. It is not the government job to get in the middle of these kinds of transactions. The down side of the government trying to play police with these kinds of deals means lots of companies will never start up since Investors will not put their money at risk if they can not sale to exit the investment.