#FTC accuses Big Tech of using merger ‘loopholes’ to dodge antitrust scrutiny

Big tech companies have snapped up hundreds of smaller tech firms in recent years — and have improperly used “loopholes” to avoid antitrust scrutiny, according to the Federal Trade Commission. 

Critics say that acquisitions can be used by big tech firms to shut down potential competitors, stifling innovation, hurting users and potentially creating or reinforcing monopolies. That’s why the FTC and Justice Department are supposed to review larger deals. 

But Facebook, Google, Amazon, Apple and Microsoft together made 616 acquisitions from 2010 to 2019 that were worth more than $1 million each and which did not trigger reviews by the FTC or Department of Justice, the FTC said in a study released Wednesday.

FTC commissioner Rebecca Slaughter described smaller acquisitions as part of a “Pac-Man strategy” through which companies can gobble up their competition. 

“Each individual merger viewed independently may not seem to have significant impact,” the Democrat said. “But the collective impact of hundreds of smaller acquisitions can lead to a monopolistic behavior.”

Meanwhile, FTC chief Lina Khan — a Big Tech critic who was confirmed as chair in June — argued that the report showed that regulators need to scrutinize smaller transactions more frequently.

“The FTC may have created loopholes that are unjustifiably enabling deals to fly under the radar,” Khan said. 

The FTC review also found that big tech companies routinely use controversial non-compete clauses, which ban workers from taking jobs at rival companies. 

Nearly 77 percent of the transactions reviewed used “non-compete clauses for founders and key employees of the acquired entities,” according to the review. 

The Biden administration argued in a July executive order that non-compete clauses “may unfairly limit worker mobility” and encouraged the FTC to “curtail” their use. 

Khan echoed the administration’s argument.

“Exploring how firms in digital markets may be using acquisitions to lock-up key assets along with talent will be a worthy area of study,” she said. 

Matt Stoller, an antitrust expert and former senior adviser to the Senate Budget Committee, said the FTC’s report shows how Big Tech firms use non-competes to stifle competition. 

“There aren’t that many people that really know how to manage large amounts of data, or certain aspects of cybersecurity, or have deep knowledge of search algorithms,” Stoller told The Post. “If you can lock up a significant amount of people who know that area, then you give yourself a competitive advantage.”

The FTC has also made headlines and enraged big tech firms in recent months for its probes of Amazon and Facebook. 

Khan’s FTC is reportedly reviewing Amazon’s $8.45 billion acquisition of film studio MGM as part of a wide-ranging probe into the company’s business practices. The agency is also investigating Facebook for monopolization and anti-competitive conduct, including over its purchase of Instagram. 

Both Facebook and Amazon have sought to force Khan to refuse herself from the probes, arguing that her having written critically about the companies before she became FTC chair means she cannot be impartial.