Press Release: @FTC Unanimously Votes to Examine Past Acquisitions by Large Technology Companies

PRESS RELEASE

The Federal Trade Commission issued Special Orders to five large technology firms, requiring them to provide information about prior acquisitions not reported to the antitrust agencies under the Hart-Scott-Rodino (HSR) Act. The orders require Alphabet Inc. (including Google), Amazon.com, Inc., Apple Inc., Facebook, Inc., and Microsoft Corp. to provide information and documents on the terms, scope, structure, and purpose of transactions that each company consummated between Jan. 1, 2010 and Dec. 31, 2019.

The Commission issued these orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The orders will help the FTC deepen its understanding of large technology firms’ acquisition activity, including how these firms report their transactions to the federal antitrust agencies, and whether large tech companies are making potentially anticompetitive acquisitions of nascent or potential competitors that fall below HSR filing thresholds and therefore do not need to be reported to the antitrust agencies.

“Digital technology companies are a big part of the economy and our daily lives,” said FTC Chairman Joe Simons. “This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”

The Special Orders require each recipient to identify acquisitions that were not reported to the FTC and the U.S. Department of Justice under the HSR Act, and to provide information similar to that requested on the HSR notification and report form. The orders also require companies to provide information and documents on their corporate acquisition strategies, voting and board appointment agreements, agreements to hire key personnel from other companies, and post-employment covenants not to compete. Last, the orders ask for information related to post-acquisition product development and pricing, including whether and how acquired assets were integrated and how acquired data has been treated.

The Commission plans to use the information obtained in this study to examine trends in acquisitions and the structure of deals, including whether acquisitions not subject to HSR notification might have raised competitive concerns, and the nature and extent of other agreements that may restrict competition. The Commission also seeks to learn more about how small firms perform after they are acquired by large technology firms. These and related issues were discussed during several sessions of the FTC’s 2018 Hearings on Competition and Consumer Protection in the 21st Century, and this study is part of the follow-up from those Hearings.

The FTC has a statutory right under the HSR Act to review acquisitions and mergers over a certain size before they are consummated, and the study will help the Commission consider whether additional transactions should be subject to premerger notification requirements. The orders will also contribute broadly to the FTC’s understanding of technology markets, and thereby support the FTC’s program of vigorous and effective enforcement to promote competition and protect consumers in digital markets.

The Commission vote to approve issuing the Special Orders was 5-0. Commissioners Christine S. Wilson and Rohit Chopra issued a joint statement.

The Federal Trade Commission develops policy initiatives on issues that affect competition, consumers, and the U.S. economy. Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

@ranaforoohar: Big Tech has moved from offering utopia to selling dystopia

The tide has finally turned against Big Tech. Last week, Twitter banned political advertising; EU antitrust chief Margrethe Vestager said she was considering much tougher monopoly standards; the city of Toronto pushed back on Google’s Sidewalk project; Australia sued the search giant over alleged misuse of location data; and US presidential candidate Elizabeth Warren called out Facebook’s political lobbying as she declared she would end the revolving door between business and policy if she wins the White House.

It has been a long time coming.

Read the post on FT.com

Must Read: @ranaforoohar: Fact-checking Facebook’s fantasies

Criticising Big Tech can feel redundant at a time when many chief executives in Silicon Valley are doing such a good job of making the public sceptical about their business models and their executive competence all by themselves.  Even so, Mark Zuckerberg’s speech at Georgetown University and his testimony on Capitol Hill last week are worthy of note. Facebook insists it does not want to be responsible for false political advertising. So I’d like to help Mr Zuckerberg out by fact checking a few of the points of disinformation in his own communications.

Read the post on FT.com

@musictechpolicy: The best way to hit back at Silicon Valley power: End supervoting stock held by insiders via @NYDailyNews

The meltdown of WeWork’s CEO and Mark Zuckerberg’s bizarre threat to sue the U.S. offer a teachable moment: When you concentrate vast and unaccountable control over major companies in founders — no matter how creative or capable — bad things happen.

In Silicon Valley, the problem starts with “supervoting” stock structures that let the CEO (mostly) boy wonders raise mountains of cash from star-struck investors without giving up meaningful control over the company. The trick is a gimmicky “dual-share” stock structure in which the insiders’ own shares have powerful voting rights but ordinary investors are stuck on the sidelines. SEC Commissioner Robert Jackson has warned this dual class in effect creates “corporate royalty.”George Orwell would probably say it’s just another example of the “Some Animals Are More Equal Than Others” corruption that eventually poisons pretty much every revolution.

Read the post on New York Daily News

@alexeheath & @jtoonkel: Internal Facebook Memo Reveals Guidelines for Showcasing News

[Editor Charlie sez:  Looking more like a publisher every day!  Buhbye 230!  Buhbye DMCA!]

Facebook has said repeatedly that it isn’t in the journalism business, but a team of human editors responsible for an upcoming news initiative by the company will exercise significant control over the presentation of top stories, including judging them over their use of anonymous sources, according to internal guidelines seen by The Information.

While Facebook’s plans to hire human editors for an upcoming news tab have been previously reported, the guidelines, which Facebook recently shared with employees in an internal memo, offer the first insight into how the team will make decisions that could affect the news stories millions of people see. One person who has seen a version of the tab being tested by Facebook employees said it featured stories from The Wall Street Journal, ABC News, CBS News, National Geographic, BBC, The Huffington Post, and The Hill, though some of those publishers don’t appear to have officially struck agreements with Facebook yet.

Read the post on The Information (subscription required and well worth it)

EU Turns Nastier for U.S. Tech & Media Giants

European Union’s (EU) anti-trust regulatory activities have been dealing a severe blow to U.S. technology companies. The flurry of investigations related to data privacy, anti-competition practices and tax avoidance have been taking a toll on these companies since quite some time now.

Notably, Alphabet’s GOOGL Google and Facebook FB are hurt by the implementation of General Data Protection Regulation (GDPR) in the EU.

Google was fined $57 million by French data protection authority under GDPR for not being able to disclose massive user data collection across its search platform, Google Maps and YouTube.

Meanwhile, the social media giant is allegedly storing millions of user passwords across its core Facebook app, Facebook Lite and Instagram platforms in an unencrypted format. Europe’s default privacy regulator is carrying out the investigation following which the company might face a fine of $2.2 billion.

Read the post on Yahoo Finance

@damclaugh: FTC Chief Says He’s Willing to Break Up Big Tech Companies

The head of the U.S. Federal Trade Commission said he’s prepared to break up major technology platforms if necessary by undoing their past mergers as his agency investigates whether companies including Facebook Inc. are harming competition.

FTC Chairman Joe Simons, who is leading a broad review of the technology sector, said in an interview Tuesday that breaking up a company is challenging, but could be the right remedy to rein in dominant companies and restore competition.

“If you have to, you do it,” Simons said about breaking up tech companies. “It’s not ideal because it’s very messy. But if you have to you have to.”

Read the post on Bloomberg