FTC releases findings on how Big Tech eats little tech

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Federal Trade Commission chair Lina Khan signaled changes are on the way in how the agency scrutinizes acquisitions after revealing the results of a study of a decade's worth of Big Tech company deals that weren't reported to the agency.

Why it matters: Tech's business ecosystem is built on giant companies buying up small startups, but the message from the antitrust agency this week could chill mergers and acquisitions in the sector.

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What they found: The FTC reviewed 616 transactions valued at $1 million or more between 2010 and 2019 that were not reported to antitrust authorities by Amazon, Apple, Facebook, Google and Microsoft.

  • 94 of the transactions actually exceeded the dollar size threshold that would require companies to report a deal. The deals may have qualified for other regulatory exemptions.

  • 79% of transactions used deferred or contingent compensation to founders and key employees, and nearly 77% involved non-compete clauses.

  • 36% of the transactions involved assuming some amount of debt or liabilities.

What they're saying: In a statement, Khan said the report shows that loopholes may be "unjustifiably enabling deals to fly under the radar."

  • Matt Stoller, director of research at the American Economic Liberties Project, said the high percentage of non-compete clauses was especially troubling.

  • "If nothing else, it's a clear anticompetitive intent to just take talent and prevent them from competing with you," Stoller said. "And there is a limited amount of tech talent."

The other side: Nothing in the report indicates that rules were broken or that the deals were anticompetitive, Neil Chilson, a former FTC adviser, pointed out.

  • "I think the message is pretty clear from the chair: She's suspicious of mergers, no matter what the size, just based on a belief that mergers at any size are suspect and should be reviewed," Chilson, now senior research fellow for Tech and Innovation at Stand Together, told Axios.

  • "The law certainly is not behind her on that, and I don't think the economics are particularly there either, and nothing in the report supports that assertion."

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