As it tries to sanitize the playing field, the FTC has announced an investigation into some of the biggest tech companies: Amazon, Apple, Facebook, Google and Microsoft.
The Federal Trade Commission, FTC, has announced its decision to begin an investigation targeted at some tech giants. The Commission said that the investigation is to shine its spotlight on these companies’ acquisitions carried out in the past, that may not have been thoroughly scrutinized by the regulator. The tech giants involved include the five largest including Alphabet, Apple, Facebook, Amazon, and Microsoft.
FTC Begins Investigation
According to an official FTC press release, the Commission has already issued “Special Orders” to all of these companies. The Special Orders require each of them to give up certain information about the acquisitions as they were “not reported to the antitrust agencies under the Hart-Scott-Rodino (HSR) Act. The investigation requires these companies to tender all documents for acquisitions done between Jan. 1, 2010 and Dec. 31, 2019.
The information, according to the press release, covers a wide range of information. They include specifics on the structure, scope, terms and also the purpose of each of the transactions. Other information the FTC wants includes corporate acquisition strategies, agreements that govern voting and board appointments, and how personnel from other establishments are employed.
Purpose of the FTC Investigation
While the general tone of the development seems to connote some trouble, the FTC insists otherwise. According to FTC Chairman Joseph Simons, the Special Order is not an attempt at policing the activities of these companies. Speaking to reporters in a conference call, Simons says the move is to help the FTC understand activity not covered by the HSR. He also added that there are no financial limits for the transactions the investigation will cover. This suggests that the move is somewhat educational.
In the press release, Simons corroborates comments made during the conference call. He also further suggests that the investigation is to keep markets operating fairly enough for all players.
“Digital technology companies are a big part of the economy and our daily lives. 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 Tech Giants
The five tech giants involved lost some weight shortly after the FTC investigation announcement. However, at the moment, they are all trading in green with a combined valuation over $5.5 trillion four except Facebook, over $1 trillion.
Amazon (AMZN) stock price in the pre-market is $2,166.95 (+0.75%). Alphabet (GOOGL) stock is at $1,517.84 (+0.52%). Apple (AAPL) stock is also climbing. It is trading at $321.73 (0.66%). Microsoft (MSFT) stock is now at $186.08 (0.89%) while Facebook (F) stock is trading at 208.01 (0.40%). But in general, its value is falling in comparison with what it used to be.
These companies usually only announce large acquisitions and leave out the smaller ones. The law requires the FTC to approve any acquisitions larger than a certain threshold. This means that are a lot of smaller acquisitions that go under the radar.
In a conversation with CNBC last year, Apple CEO Tim Cook said the company made 20 to 25 acquisitions within six months. Last year, Google also spent about $1 billion in acquiring an unknown number of smaller companies.