WASHINGTON—Following an announcement that the Federal Trade Commission will examine 10 years’ worth of past acquisitions by large technology companies, the Information Technology and Innovation Foundation (ITIF), issued the following statement from ITIF President Robert D. Atkinson, author of the book Big Is Beautiful: Debunking the Myth of Small Business:
An objective analysis of big tech companies’ past aquistions is likely to find that the lion’s share have benefited consumers by offering more valuable products and services at lower cost through greater economies of scale. That criteria—the consumer welfare standard—should continue to be the North Star that guides antitrust regulation.
It would be one thing if the FTC truly were undertaking this examination to “deepen its understanding” of the competitive implications of tech acquisitions in order to better inform future merger reviews, but it is deeply concerning that the Commission has indicated this may be a fishing expedition that leads it to retroactively split up companies that have already merged. This risks chilling innovation in the entire technology sector by casting generalized suspicion on common entrepreneurial pathways and business practices that are critical for spurring it.
In the past, entrepreneurs have been able to conduct research, develop new products, and aspire to grow start-up companies to the stage where they could become attractive acquisitions for bigger companies that are in a position to offer more resources and scale. That formula has allowed countless innovators to bring world-changing ideas to full frution. Consider the little company Keyhole, which developed EarthViewer software that let you see virtually any part of the planet. Its founder imagined making the software into a street-level service, but thought it would take so long that the business model may as well be science fiction—and then Google aquired it and was able to deliver StreetView mapping software in less than five years. Stories like this are indicative of a benefitial feature of the tech economy, not a bug.
Populist ferver against “Big Tech” has been building for a long time. Today’s action by the FTC may be an indication that we’ve reached peak panic. Regulators need to recognize that buying companies is not inherently anticompetitive. To the contrary, mergers and acquisitions often create tremendous value for consumers, particuarly in the technology sector. If the FTC determines in its examination that too many mergers have escaped appropriate regulatory scrutiny because reporting thresholds are too high under the Hart-Scott-Rodino Act, then the proper remedy is for Congress to revisit the law, not for the FTC to revisit mergers that have already taken place.
