FTC Calls for Review of FAMGA Acquisitions

Another day, another stack of paperwork for tech lawyers.

Yesterday, the Federal Trade Commission (FTC) said it's ordered the U.S.' five largest tech companies to hand over details about their acquisition sprees over the last decade. The effort spans Alphabet, Amazon, Apple, Facebook, and Microsoft.

Think of this as a study sesh

On a call with reporters yesterday, FTC Chairman Joe Simons called the review a "research and policy project." The agency's looking into whether acquisitions of smaller startups stifled competition or harmed consumers.

• The FTC is taking a broad definition of "acquisition," including post-acquisition pricing strategies and data practices.

The backstory

A 1976 law required companies to report deals larger than a certain threshold to the FTC or Department of Justice. In 2010, the threshold was $63.4 million. Later this month, it's being adjusted to $94 million.

Deals over the threshold are subject to advance review, but most aren't big enough to be vetted by U.S. competition authorities. The FTC will look at "hundreds" of non-reported acquisitions, Simons said. Could this lead to further enforcement? "All options are on the table," including the "unwinding" of a deal.

What it means for Big Tech

M&A provided the fuel for Big Tech's growth in the 2010s. Buying smaller companies helped 1) improve tech stacks 2) slide into the DMs of new markets 3) hoover up valuable talent (aka acqui-hiring) and 4) head off competition.

These deals happen frequently. Last May, Tim Cook said Apple scoops up a company every few weeks, but we don't know much more than that. "Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans," Apple spokespeople like to say.

Zoom out: Amazon, Apple, Alphabet, and Facebook face investigations from the U.S. House, various FTC and DOJ offices, state attorneys general, and foreign competition authorities. I probably forgot someone.