Giant tech firms are coming under increasing scrutiny in Washington over a wave of acquisitions of startups. Antitrust experts and lawmakers argue that the deals have allowed the companies to shut down competition.
(TNS) — 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.”
Simons is overseeing a tech task force to examine conduct in the industry and could move to unwind mergers if investigators find the deals were anticompetitive. The agency has opened a broad investigation into Facebook, including whether the company acquired startups to thwart competition, according to people familiar with the matter.
Facebook bought photo-sharing site Instagram in 2012 and WhatsApp, a messaging service, in 2014. The FTC approved both acquisitions at the time. Critics including Facebook co-founder Chris Hughes have called for antitrust enforcers to unwind those deals.
U.S. antitrust enforcers could move to unwind the acquisitions even though they previously won approval, Simons said. The FTC could say “we made a mistake,” he said. He would need a court to approve such a move.
Facebook declined to comment.
Giant tech firms are coming under increasing scrutiny in Washington over a wave of acquisitions of startups. Antitrust experts and lawmakers argue that the deals have allowed the companies to shut down competition by buying — and eliminating — emerging rivals.
Presidential candidate Elizabeth Warren, a Massachusetts senator, has been among the most outspoken about acquisitions by big tech companies, saying earlier this year they are “using mergers to limit competition” by buying competitors. She cited Facebook’s deal for Instagram, Google’s acquisition of mapping company Waze and Amazon.com Inc.’s takeover of Diapers.com.
Simons didn’t confirm details of the Facebook investigation beyond what the company disclosed in July, when it said that the FTC had initiated a broad probe into several business lines — social media, digital advertising and mobile applications. Any inquiry into its past acquisitions would focus on what would have happened to those companies if they hadn’t been bought by Facebook, Simons said.
“There’s a question about what caused Instagram to be as successful as it is,” Simons said. “Was it the fact that the seed was already there and it was going to be germinated no matter what or was the seed germinated because Facebook acquired it?”
(With assistance from Ben Brody, Naomi Nix and Joe Light.)
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