WASHINGTON — The Federal Trade Commission said Tuesday it had ordered Amazon, Apple, Facebook, Google’s parent company Alphabet and Microsoft to turn over information about past acquisitions, broadening its review of the power of big tech companies.
The FTC said it requested information about hundreds of smaller deals made by the five tech companies over the past decade that weren’t required to be reported to regulators by law and could provide insights into antitrust abuses. Facebook, Google and others have scooped up dozens of smaller tech firms over the years, many of them for less than $100 million.
“If during this study we see transactions that were problematic, all our options are on the table and it is conceivable we can initiate enforcement action with those deals,” Joseph Simons, the FTC chairman, said in a call with reporters. He added that the orders for information were separate from the FTC’s antitrust investigations into big tech companies, but could inform the inquiries.
The actions escalate the scrutiny in Washington of the nation’s largest technology companies. The Justice Department, Congress and state attorneys generals are also examining Apple, Amazon and others to probe whether they acted in an anticompetitive manner in many different areas. Lawmakers have united around the issue, in a rare show of bipartisanship.
In examining the smaller deals, the FTC signaled it was looking specifically into a tech industry practice, known as “killer acquisitions,” that smaller rivals have said was used to choke off competition. Under that strategy, the large tech companies purchase a nascent competitor to protect their dominance and prevent the smaller company from growing into a bigger threat.
“The concern is that there were hundreds of acquisitions by big companies like Facebook and Google that were intended to nip in the bud the firms that might have ended up being important competitors and innovators that could have changed the paradigm,” said A. Douglas Melamed, a professor at Stanford Law School and former antitrust official at the Justice Department.
The FTC has previously made similar demands for information from the pharmaceutical and retail industries to explore how companies in those sectors used pricing and ad strategies, for example, to harm consumers. But the request for information about past tech mergers was the first by the agency for Silicon Valley giants.
Notably, the FTC mentioned in its announcement that it had asked for information from Microsoft. While Amazon, Apple, Facebook and Google have been under scrutiny by regulators since last year, Microsoft — which battled and settled an antitrust case in the late 1990s — had appeared to escape most of the current backlash.
Amazon, Facebook, Apple and Google declined to comment. A spokeswoman for Microsoft did not respond to a request for comment. The companies could file motions to quash the FTC’s requests.
“Google didn’t invent YouTube. Facebook didn’t invent Instagram. And the list goes on and on,” Rohit Chopra, an FTC commissioner and a Democrat, said in a tweet that referred to past acquisitions by Google and Facebook. “That’s why I voted to order @Google, @Facebook, @Amazon, @Apple, & @Microsoft to hand over a decade of records about their buying binge.”
The FTC’s requests could generate a voluminous quantity of information.
In a sample order posted by the agency, it asked for internal documents related to the deals — including analyses presented to top executives and the minutes of board meetings where the acquisitions were discussed. It asked questions about whether certain purchases were a “data acquisition” and about which venture capitalists and angel investors had stakes in the smaller companies.
The FTC also said in its announcement that it would look at “agreements to hire key personnel from other companies.” Silicon Valley companies are known to buy other, smaller firms as a way of bringing in key talent — a practice known as “acqui-hiring.”
The announcement immediately cast a pall over the stocks of the large tech companies. The tech heavy Nasdaq composite curtailed its gains Tuesday, although it remained in positive territory. Facebook and Microsoft were particularly hard hit.
In a statement, Rep. David Cicilline, D-R.I., who is leading the House Judiciary Committee’s inquiry into the tech giants, said the FTC’s order was an “important step in correcting the decades of inaction by antitrust enforcement agencies that have led to consolidation in the digital marketplace.”
Last month, the House panel heard testimony from executives of small companies like Sonos and PopSockets who said that tech behemoths like Google and Amazon had harmed their businesses.
The Justice Department plans to hold a series of public discussions in Silicon Valley this week with venture capitalists. Panels at the event will focus on so-called kill zones — in which the dominance of one company renders attempts to start a competing firm useless — and on investing in markets dominated by major internet platforms.
The broad range of interests by regulators highlights the issues facing the technology companies, said Diana Moss, president of the American Antitrust Institute, a progressive think tank.
“Other than the massive trusts of late 1900s, I don’t think antitrust enforcers have had to deal with the kind of strategic motivation for M&A that the tech platforms appear to have,” she said.