Apple & big tech use 'loopholes' to escape merger regulations, says FTC

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Federal Trade Commission chair Lina Khan says that Big Tech firms, including Apple, had exploited "loopholes" to make hundreds of acquisition deals without informing antitrust regulators.

Lina Khan. Credit: An Rong Xu/Getty
Lina Khan. Credit: An Rong Xu/Getty


The FTC has published a report describing 819 incidents of transactions, over 10 years, which were small enough to not require regulatory approval. The transaction range from changes of voting control, to patent acquisition, and hiring.

According to Bloomberg, FTC Chair Lina Khan addressed a public meeting where she described the Commission's findings, and the conclusion that Big Tech was finding ways to grow unchecked.

"This study highlights the systemic nature of their acquisition strategy," she said. "Digital markets in particular reveal how smaller transactions invite vigilance."

Mergers, deals and other transactions that are large enough to be reported are said to be covered by the Hart-Scott-Rodino (HSR) Act. The FTC's report lists what it calls "non-HSR reportable transactions," which were compiled from information from five Big Tech companies.

In February 2020, the FTC issued Special Orders to Apple, Alphabet (including Google), Amazon, Facebook, and Microsoft. The orders required them to account for the "terms, scope, structure, and purpose" of acquisitions and other non-HSR deals made between January 1, 2010, and December 31, 2019.

Read on AppleInsider

Comments

  • Reply 1 of 18
    Maybe I’m missing something; regulators construct rules and inform companies to follow them. Companies follow said rules and are now being chastised by regulators for doing so. 
    longpaththe1maximuslkrupprob53beowulfschmidtmike1lmasanticornchipwilliamhapplguy
  • Reply 2 of 18
    She's full of nonsense. This is not new or unique to tech. Thousands of companies have been doing tens of thousands such acquisitions (they're not "mergers") that don't meet HSR thresholds for many many decades now. They're often called "A&D" (play on R&D), i.e., acquisitions and development. It's a common means for companies to grow.

    It's perfectly legal and more importantly reasonable, since otherwise, investors would be deluged with too much information. Most of these A&D deals go nowhere -- for every iTunes and iPod that came out of such A&D for Apple, there are likely a hundred others that went nowhere. The Congress put in the HSR thresholds for a reason: it speaks to a larger principle that an activity must be "material" for disclosure purposes. 

    These are just officious, overreaching, meddlesome bureaucrats with nothing much to do, going after a successful group of companies (I am not saying there aren't other legitimate reasons to go after them, e.g., Section 230, privacy etc).

    "Vigilance" my ass (paraphrasing Schiller). Someone should remind her of the wonderful quote from judge in the Epic case: success is not illegal.
    the1maximus12Strangersapplguywatto_cobra
  • Reply 3 of 18
    Following the rules and jumping through the hoops set up by legislators is not using “loopholes”. Legislators & regulators use this kind of defamatory language in order to excuse their desire to expand the scope of their power. One could easily argue that the use of the “general welfare” & “interstate commerce” clause to skirt Amendment 10 is the real loophole, and that the vast majority of regulatory and intelligence agencies owe their entire existence to such loopholes, just as Marbury v Madison exploited a loophole of assuming the three co-equal branches of the central government in the US would be adversarial; but actual practice revealed that Congress would allow the Judiciary to seize a position as sole arbiter of constitutionality because of short term opposition to the President at the time, despite the fact that Marbury v Madison has, itself, no constitutional basis. The irony of regulators whose position in an organization that owes its existence to a loophole using the term loophole to disparage private business following the law & regulations sadly goes over the heads of too many.
    edited September 16 applguywatto_cobra
  • Reply 4 of 18
    gerard said:
    Maybe I’m missing something; regulators construct rules and inform companies to follow them. Companies follow said rules and are now being chastised by regulators for doing so. 
    Exactly. It's like the situation with big corporations and taxes. Don't whine about them using the law to avoid paying taxes, change the law. Don't whine about them keeping their acquisitions small enough to avoid scrutiny, change the law. Laws are just words on paper, they can be rewritten.
    edited September 16 watto_cobra
  • Reply 5 of 18
    Some of the comments here seem to imply that companies are being punished for exploiting loopholes, but all I see is the identification of a behavior. This conclusion would indicate that perhaps they should refine the laws to more accurately achieve their aim, but before they make changes to a law, they have to indentify potential issues with the existing laws. I think that’s what’s happening here. It’s not whining, and it’s not unfair treatment of anybody. 
    Graeme000AI_lias
  • Reply 6 of 18
    lkrupplkrupp Posts: 9,637member
    Politicians created the loopholes. Let politicians close the loopholes. Big tech has done nothing wrong here. They are following the rules, just like they follow the tax code. Turns out tech financial lawyers are smarter than the regulators OR the loopholes are there because of lobbying. Either way, it’s on the regulators, not the companies.
    mike1anantksundaramwatto_cobra
  • Reply 7 of 18
    Lina Khan's views as boss of the United States top antitrust regulator are as dreary as the room she had her portrait taken in.  :(
    anantksundaramapplguywatto_cobra
  • Reply 8 of 18
    rob53rob53 Posts: 2,724member
    lkrupp said:
    Politicians created the loopholes. Let politicians close the loopholes. Big tech has done nothing wrong here. They are following the rules, just like they follow the tax code. Turns out tech financial lawyers are smarter than the regulators OR the loopholes are there because of lobbying. Either way, it’s on the regulators, not the companies.
    I'm all for changing laws that affect corporations and people's taxes. Special tax provisions that give the rich more money which regular people have to cover need to be closed but these need to be closed by Congress, who created them in the first place. What I don't like are the selective attacks on certain companies while not doing anything about all the billionaires not paying any taxes. This article isn't necessarily about taxes but regulations and taxes, and the specialized, selective treatment some companies get, is something that absolutely needs to be addressed. That and patent reform, which needs to be high on the list. I'm tired of lawyers getting so much money suing everyone, which ends up costing consumers more money.
    watto_cobra
  • Reply 9 of 18
    DAalseth said:
    gerard said:
    Maybe I’m missing something; regulators construct rules and inform companies to follow them. Companies follow said rules and are now being chastised by regulators for doing so. 
    Exactly. It's like the situation with big corporations and taxes. Don't whine about them using the law to avoid paying taxes, change the law. Don't while about them keeping their acquisitions small enough to avoid scrutiny, change the law. Laws are just words on paper, they can be rewritten.
    Yeah, I love the way lawmakers and regulators complain about companies and people using the loopholes that those very same lawmakers and regulators wrote into the laws and regulations.  It's almost as if they want to blame others for their mistakes...
    DAalsethwatto_cobra
  • Reply 10 of 18
    It's long been a practice for companies to acquire others to add features or skills which are lacking - it's this practice which enabled Google to acquire Android and Apple to get Siri.

    Heck, Google's entire venture into smartphones can be chalked up this: there would be no made by Google Pixel if they hadn't acquired HTC's smartphone division.

    A lot of startups are formed just in the hopes that a large company would acquire them: look at Qualcomm's acquisition of Nuvia which never would've produced an ARM core competitor unless they stood under the umbrella of a larger more established company.

    Heck, they still might not were it not for Microsoft's determination to make their own chips, probably using Qualcomm as their silicon proxy. Qualcomm certainly doesn't have the chops, stomach, or determination to accomplish something like that on their own. They've always been a company who assembles standard ARM cores into SoCs for purchase by OEM handset makers - and never demonstrated any desire or expertise to take on companies the scale of AMD or Intel on products powering real PCs.
    watto_cobra
  • Reply 11 of 18
    And I suppose the pharma, automobile, banking, food industries are following the letter of the law and aren’t taking advantage of these loopholes? And, of course, the über wealthy, being responsible citizens are also paying their fair share and NONE of them have offshore accounts to hide their wealth. 

    This is just bullshit smokescreen to take the focus off of those with the most money who are buying their representation in government. 

    If this was really a problem, they would have closed the loopholes decades ago.

    I know it’s the FTC, but how about government start focusing on more important things like climate change. 
    watto_cobra
  • Reply 12 of 18
    mike1mike1 Posts: 2,813member
    Some of the comments here seem to imply that companies are being punished for exploiting loopholes, but all I see is the identification of a behavior. This conclusion would indicate that perhaps they should refine the laws to more accurately achieve their aim, but before they make changes to a law, they have to indentify potential issues with the existing laws. I think that’s what’s happening here. It’s not whining, and it’s not unfair treatment of anybody. 
    Not punished, but her word choice and tone are meant to imply wrongdoing and create indignation.

    edited September 16 stompyy2anbeowulfschmidtwatto_cobra
  • Reply 13 of 18
    davidwdavidw Posts: 1,374member
    Some of the comments here seem to imply that companies are being punished for exploiting loopholes, but all I see is the identification of a behavior. This conclusion would indicate that perhaps they should refine the laws to more accurately achieve their aim, but before they make changes to a law, they have to indentify potential issues with the existing laws. I think that’s what’s happening here. It’s not whining, and it’s not unfair treatment of anybody. 
    The fact that after reading the article, you are saying that these companies (that followed all FTC regulations when acquiring smaller companies), are "exploiting loopholes", is punishing the companies for doing nothing wrong. What made you say that companies following all FTC regulations when acquiring smaller companies, are "exploiting loopholes"? Could it be that the newly appointed head of the FTC put out a report that unfairly implies that?

    Or do you already have a bias against big techs, like the newly appointed head of the FTC?    

    https://www.npr.org/2021/06/15/1006807299/lina-khan-prominent-big-tech-critic-will-lead-the-ftc

    That would be like saying wealthy people that made a lot of money investing in big tech, are "exploiting loopholes" when they only have to pay 20% long term capital gains tax, on that income. 
    edited September 16 watto_cobra
  • Reply 14 of 18
    longpath said:
    Following the rules and jumping through the hoops set up by legislators is not using “loopholes”. Legislators & regulators use this kind of defamatory language in order to excuse their desire to expand the scope of their power. One could easily argue that the use of the “general welfare” & “interstate commerce” clause to skirt Amendment 10 is the real loophole, and that the vast majority of regulatory and intelligence agencies owe their entire existence to such loopholes, just as Marbury v Madison exploited a loophole of assuming the three co-equal branches of the central government in the US would be adversarial; but actual practice revealed that Congress would allow the Judiciary to seize a position as sole arbiter of constitutionality because of short term opposition to the President at the time, despite the fact that Marbury v Madison has, itself, no constitutional basis. The irony of regulators whose position in an organization that owes its existence to a loophole using the term loophole to disparage private business following the law & regulations sadly goes over the heads of too many.
    Of course, Marbury v Madison has a constitutional basis. Did you get your law degree from Wikipedia?

    watto_cobra
  • Reply 15 of 18
    Governments use armies to escape merger regulations. But they say it’s everyone else who is evil. 

    watto_cobra
  • Reply 16 of 18

    larryjw said:
    Of course, Marbury v Madison has a constitutional basis. Did you get your law degree from Wikipedia?

    There’s nothing in the Constitution that gives the courts the power to “interpret” the Constitution. Marburg v Madison was a power grab, no matter what your law professor told you. If you don’t believe me, read the Constitution. Don’t “interpret” it. Actually read it, without changing the words.


    cornchipwatto_cobra
  • Reply 17 of 18
    lonestar1 said:

    larryjw said:
    Of course, Marbury v Madison has a constitutional basis. Did you get your law degree from Wikipedia?

    There’s nothing in the Constitution that gives the courts the power to “interpret” the Constitution. Marburg v Madison was a power grab, no matter what your law professor told you. If you don’t believe me, read the Constitution. Don’t “interpret” it. Actually read it, without changing the words.


    That's the whole purpose of Courts, in addition to the other branches -- interpret legal text -- of which the Constitution is one such legal text. 

    "Read the Constitution Don't interpret it"!  Tells me you can't actually read. Reading is not just sounding out the words. There's no such thing as Black Letter Law. 
    muthuk_vanalingamwatto_cobra
  • Reply 18 of 18
    Just because Apple, Google, whoever buy up a bunch of smaller companies doesn’t mean anything torrid or ill-gotten is going on. Just because you and I can’t figure out why Apple bought a company doesn’t mean anything. It took years to realize why they bought Prime Sense- FaceID. Just because it took what, 5 years or so, doesn’t mean anything “bad” is going on. The only issue would be if they were trying to eliminate other direct competitors, like if they tried to buy out Samsung, or Dell, or Microsoft. Or if 15 years ago, Facebook tried to take out MySpace. 
    watto_cobra
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