FTC, DOJ launch joint public inquiry of merger rules focused on big tech

Posted:
in General Discussion
The U.S. Federal Trade Commission and Justice Department want to update merger rules that will affect Apple and other tech giants, in a joint effort to prevent illegal or anticompetitive acquisitions or mergers from taking place.




The FTC and DOJ's Antitrust Division launched a joint public inquiry on Tuesday, with the aim of "strengthening enforcement against illegal mergers," an FTC statement reads. By this, it means to crack down on any acquisitions and mergers that could reduce or harm competition in industries in a variety of ways.

"Illegal mergers can inflict a host of harms, from higher prices and lower wages to diminished opportunity, reduced innovation, and less resiliency," said FTC Chair Lina M. Khan. "This inquiry launched by the FTC and DOJ is designed to ensure that our merger guidelines accurately reflect modern realities and equip us to forcefully enforce the law against unlawful deals."

Assistant Attorney General Jonathan Kanter of the DOJ's Antitrust Division said "We need to understand why so many industries have too few competitors, and to think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy."

As part of the inquiry, there is a request for information on whether existing guidelines sufficiently ban transactions that could lessen competition or tend to create a monopoly, as well as whether distinctions between horizontal and vertical transactions should be modernized.

It also wants public input on the use of market definitions when analyzing competitive effects, guidelines on threats to potential and nascent competitors, the effects of buyer power over labor markets and other areas, and areas where there is a presumption that specific transactions could be anti-competitive in nature.

There is also a focus on digital markets, with the agencies keen to be told how to account for "key areas of the modern economy like digital markets." Characteristics such as zero-price products, multi-sided markets, and data aggregation are areas that current rules do not currently address in great detail.

The FTC and DOJ's period for public comment is open for a 60-day period, ending March 21, with the comments used by the agencies to consider future rule revisions.

The announcement occurs on the same date that Microsoft declared it wanted to acquire Activision Blizzard in a deal valued at $68.7 billion. While subject to regulatory scrutiny and shareholder approval, the deal would result in Microsoft becoming the world's third-largest gaming company by revenue once completed.

It is highly likely that such a review is set to take on Apple and other tech giants, which often carry out acquisitions of other companies. The group has repeatedly become the target of antitrust scrutiny, including threats to break up companies and bills to prevent so-called unlawful mergers from taking place.

The FTC has also complained about tech giants in the past. In September, Khan claimed Apple and others exploited "loopholes" to perform hundreds of acquisition deals without informing antitrust regulators.

A study of 819 transactions deemed to be small enough to not require regulatory approval was deemed evidence that "highlights the systemic nature of [big tech's] acquisition strategy," said Khan. "Digital markets in particular reveal how smaller transactions invite vigilance."

Read on AppleInsider

Comments

  • Reply 1 of 8
    mac_dogmac_dog Posts: 968member
    They need to create a law that incorporates ALL companies, not just tech. How about the financial, pharmaceutical, cable and huge conglomerates like Pepsi, coke and kellogs? 
    iOS_Guy80watto_cobra
  • Reply 2 of 8
    mac_dog said:
    They need to create a law that incorporates ALL companies, not just tech. How about the financial, pharmaceutical, cable and huge conglomerates like Pepsi, coke and kellogs? 
    Both parties are not brave enough to do that. Only 3 US car makers and 3 Wireless providers, but more than 10 search engine. Do you think the US government will dare to break up these companies?

    I don’t understand why a good tech company is being blamed by other’s failure. If google can unseated yahoo, why not other can beat google. 

    Without eBay buying PayPal, we will not have Tesla and SpaceX. The owner of small tech companies have total control to sell their companies or not. 

    I am sure there are mergers that is bad for competition, eg Facebook’s Instagram/WhatsApp. But doing internet business is hard and need a lot of capital. Will Instagram succeed without FB’s deep pockets? That is not a easy question. 
    williamlondonanantksundarambeowulfschmidtwatto_cobra
  • Reply 3 of 8
    jimh2jimh2 Posts: 401member
    I’d hate to own a great small company to be acquired by Apple only to find out you cannot cash out and must remain independent. 
    watto_cobra
  • Reply 4 of 8
    genovellegenovelle Posts: 1,356member
    viclauyyc said:
    mac_dog said:
    They need to create a law that incorporates ALL companies, not just tech. How about the financial, pharmaceutical, cable and huge conglomerates like Pepsi, coke and kellogs? 
    Both parties are not brave enough to do that. Only 3 US car makers and 3 Wireless providers, but more than 10 search engine. Do you think the US government will dare to break up these companies?

    I don’t understand why a good tech company is being blamed by other’s failure. If google can unseated yahoo, why not other can beat google. 

    Without eBay buying PayPal, we will not have Tesla and SpaceX. The owner of small tech companies have total control to sell their companies or not. 

    I am sure there are mergers that is bad for competition, eg Facebook’s Instagram/WhatsApp. But doing internet business is hard and need a lot of capital. Will Instagram succeed without FB’s deep pockets? That is not a easy question. 
    Tech companies like Instagram and WhatsApp might not exist if these kinds of deals were not legal. These companies were mostly unprofitable for long periods because they were funded by venture capitalists that were investing to get a big payoff when it eventually sold. That is actually the exit strategy for these types of companies from the beginning. 

    If they didn’t have that option the business would have died from a lack of funding. So, these bills will likely kill the motivation for both startups and venture companies alike. 
    watto_cobra
  • Reply 5 of 8
    There'll be lots of excited hoo-hah, all of which will ultimately go... exactly nowhere. DoJ DoA.
    williamlondon
  • Reply 6 of 8
    viclauyyc said:
    mac_dog said:
    They need to create a law that incorporates ALL companies, not just tech. How about the financial, pharmaceutical, cable and huge conglomerates like Pepsi, coke and kellogs? 
    Both parties are not brave enough to do that. Only 3 US car makers and 3 Wireless providers, but more than 10 search engine. Do you think the US government will dare to break up these companies?

    I don’t understand why a good tech company is being blamed by other’s failure. If google can unseated yahoo, why not other can beat google. 

    Without eBay buying PayPal, we will not have Tesla and SpaceX. The owner of small tech companies have total control to sell their companies or not. 

    I am sure there are mergers that is bad for competition, eg Facebook’s Instagram/WhatsApp. But doing internet business is hard and need a lot of capital. Will Instagram succeed without FB’s deep pockets? That is not a easy question. 
    Spot on.

    Don't even get me started on the damn cable companies...
    williamlondoniOS_Guy80watto_cobra
  • Reply 7 of 8
    viclauyyc said:
    mac_dog said:
    They need to create a law that incorporates ALL companies, not just tech. How about the financial, pharmaceutical, cable and huge conglomerates like Pepsi, coke and kellogs? 
    Both parties are not brave enough to do that. Only 3 US car makers and 3 Wireless providers, but more than 10 search engine. Do you think the US government will dare to break up these companies?

    I don’t understand why a good tech company is being blamed by other’s failure. If google can unseated yahoo, why not other can beat google. 

    Without eBay buying PayPal, we will not have Tesla and SpaceX. The owner of small tech companies have total control to sell their companies or not. 

    I am sure there are mergers that is bad for competition, eg Facebook’s Instagram/WhatsApp. But doing internet business is hard and need a lot of capital. Will Instagram succeed without FB’s deep pockets? That is not a easy question. 
    Exactly. This has been a sore spot for me for decades. All the way back to when Microsoft was under fire for including Internet Explorer with the OS. The government was trying to say that it was a monopoly and it was an unfair advantage. I always felt that was total BS. Anyone could use whatever web browser they wanted and there were plenty to choose from. It absolutely was not Microsoft’s fault that people did not use other web browsers. Now I think Microsoft Edge has less than a 4% market share and Chrome is dominating. So I think that proves right there that people can make up their own mind without government interference.

    Same thing with Google. It is absolutely not Google’s fault that people are not using other search engines. I use both Google and Bing and I think that Bing is actually far superior in some instances like for example when searching videos. But if people only use Google and don’t try other search engines then that is their own fault and not the fault of Google. 
    anantksundaramwilliamlondonwatto_cobra
  • Reply 8 of 8
    chasmchasm Posts: 2,467member
    I’m all in favour of regulations that encourage more competition, but this investigation is being led by the exact same agencies that approved the very harmful mergers (such as reducing America’s telecoms from four to three), and gave Facebook yet another major acquisition after it was shown that they totally lied on the application to buy first Instagram and then WhatsApp.

    So I’m not too hopeful, though to be fair the corrupt DOJ head that oversaw the bad M&As isn’t there anymore …


    iOS_Guy80watto_cobra
Sign In or Register to comment.