trending Market Intelligence /marketintelligence/en/news-insights/trending/RxNzwoiEUrLOgJn7ur96lA2 content esgSubNav
In This List

Big tech M&A debated during Senate hearing

Podcast

Next in Tech | Episode 50: InfoSec spending up, again…

Blog

Broadcast deal market recap 2021

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Volume of Investment Research Reports on Inflation Increased in Q4 2021


Big tech M&A debated during Senate hearing

Speaking before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights on Sept. 24, antitrust experts, a top official from the Federal Trade Commission and a venture capitalist said the government must strike the right balance between over-enforcement and under-enforcement of tech mergers. Some even contended that M&A is crucial to continuing innovation.

However, lawmakers from both political parties remained concerned that large tech firms are merely interested in acquiring smaller companies to maintain their dominant position and eliminate potential competitors.

John Yun, a law professor and the director of economic education of the Global Antitrust Institute at George Mason University's Antonin Scalia Law School, said it is difficult to craft regulations around technology mergers, given that it is uncertain how future combinations might impact competition and whether they will succeed.

"The success of big tech platforms in various markets is not guaranteed," Yun said in prepared remarks during the hearing focusing on tech competition.

M&A is crucial for tech startups to successfully compete against larger players, and too much government involvement in this arena could end up stifling entrepreneurial innovation, said Patricia Nakache, general partner at Silicon Valley-based venture capital firm Trinity Ventures.

There is growing bipartisan sentiment that major tech companies, including Facebook Inc., Alphabet Inc.'s Google LLC and Amazon.com Inc. have potentially engaged in anti-competitive conducts through their mergers.

Presidential candidate Sen. Elizabeth Warren, D-Mass., recently proposed to unwind those previously approved mergers. The proposal specifically targets Facebook's purchase of Instagram LLC and WhatsApp Inc.; Amazon's acquisition of retailers Whole Foods Market Inc. and Zappos.com Inc.; and Google's purchase of DoubleClick Inc., an internet advertising services company, Waze Inc., a navigation software app, and Nest Labs Inc., a manufacturer of smart home products.

Sen. Richard Blumenthal, D-Conn., said during the hearing that antitrust enforcement agencies must be more "direct" in discussing with consumers how they investigate technology mergers.

"If the public can't trust the prosecutors to be aggressive and forthright, it won't come forward," Blumenthal said.

Likewise, Sen. Josh Hawley, R-Mo., said he is growing "increasingly concerned about [the FTC's] ability to do its job."

Bruce Hoffman, director of the bureau of competition at the FTC, responded that his agency is "resource-constrained" and is limited in the depth and scope of its antitrust investigations.

The FTC announced in February that it had formed a task force to monitor competition in U.S. technology markets. In July, Facebook disclosed that it was being investigated by the FTC for antitrust concerns, shortly after it agreed to pay a $5 billion fine to settle FTC-documented privacy violations.

The FTC has also started interviewing sellers on Amazon's e-commerce platform as part of an investigation into the company's market domination, Bloomberg News recently reported.

In July, the DOJ announced an antitrust review into "whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers."