FTC Releases Findings on How Big Tech Eats Little Tech

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. From a report: 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. 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. In a statement, Khan said the report shows that loopholes may be "unjustifiably enabling deals to fly under the radar."

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[Tailhook]

The idea that these big tech companies are buying out small tech startups sounds like baloney to me.

Here [washingtonpost.com] is a diagram of the thing you think doesn't exist. Maybe you're one of those 'visual people.'

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[Aighearach]

That's derptastic. They'll just "squash" you. Like a giant, climb down from the clouds and step on your house.

You imagine vast conspiracy to commit murder is easier than just buying up a small company to shut it down? No wonder you hide your pseudonym.

Top 1%, top 0.1%

[RyanFenton]

When the top 1% own about 40% of essentially everything in the US at least, by most measurements.

The top 0.1% in turn own about half of that.

In each case, it's relatively easy for the upper group to hold as much leverage over the others as they desire to. Any game theory would have them holding back only enough to get the maximum amount of work/service/income as they can while still holding maximum leverage over them.

So that's the same game for smaller/bigger companies - get them to do the dirty work, or take advantage of the opportunities you don't find your own employee time... then buy them out when they figure out how to make those limited opportunities work.

The less structure you have in place to prevent that (like unions)... the more than dynamic is going to be the only factor, and the more you grow into a de-facto caste system.

The motivations aren't hard to play out, any way you'd like to simulate it for yourself.

Ryan Fenton

OTOH

[RotateLeftByte]

I'm sure that there are many startups that have a good idea where their owners want to be taken over by a big company. These owners can then either retire or move on to another idea, wrinse and repeat.
While Big Tech might be predatory and I'm sure many of us remember Microsoft taking over rivals and consigning their rival tech to the graveyard just to stop competition.
Other takeovers are different. Big Tech has the funds to develop the idea a lot farther than these small companies.

to me, this is six of one

Let me know when western society decides

[DarkOx]

The real actual problem is deciding what we want.

Big tech like Big finance offers major competitive advantages on the world stage. It also clearly opens the door to all kinds of abuse and economic brittleness on the domestic side.

Amazon and Microsoft (probably Google and Apple too) are at this point a TBTF for all intents. Half the internet does not work without them. There would be no way to deal with any requirement for them the cease operation (I have no idea what that would actually be but that isn't the point) you might be able auction off the hardware and the realestate under them but you could not sell off portions of the cloud services in any practical way. Nor could they be allowed to go dark with so many depending on them - constantly. Literally they would have to be either nationalized or as with the mega banks, insurers and some large industrials during the 2007/8 financial crisis wild interventions, stunning legal decisions would have to be leveraged to keep them afloat - to save the economy from collapse.

Then there are some large network operators and carriers - Verizon, ATT, L3 ... that are probably also TBTF for similar reasons even if they are less 'visible'

Facebook, Twitter occupy a third tier where I suspect someone could turn off the lights and the sun would still rise the next morning - that is probably a sound argument for breaking up the both of them both right blood now before they move into the first group.

None of this needs to be as concentraited as it is in the hands of so few; except for the fact that if it wasn't it could end up in the hands of say BABA without the right regulation. Which would be deeply concerning..

So we have to decide do we want big tech and the economic efficiency it brings, and are we will to address the international policy considerations another way or continue to cede control to these guys? That is the choice. TBTF is also for all intents TBTR (to big to regulate) as well - again whiteness the lack of real changes since 08

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[garett_spencley]

Amazon and Microsoft (probably Google and Apple too) are at this point a TBTF for all intents.

I disagree with the TBTF claim, though I agree all companies mentioned are massive (obviously). I'm assuming that by Amazon and Microsoft you're talking about AWS and Azure, specifically. The fact that they are alternatives to one another means that you're not forced into using either, so if one fails you could switch. Redundancy. Vendor lock in is a *massive* problem with cloud services, of course. If your tech is tightly coupled to AWS without any abstraction layers in place then switching would be insane

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[DarkOx]

Its different than the IBM/COBOL or Oracle situation - because even if IBM went dark - the mainframe you have keeps humming maybe without support but running at least for a time.

Also Control Data could have bought out the S/360 division for example. They could have kept the all the people and process more or less in place, and kept churning out equipment.

AWS on the other hand if that goes lights out - you're dead.. Oh well you could also have the site hosted on Azure - well sure you could if you thought of

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[sjames]

Not to mention the process of transferring all that data. Sure, everyone should have a copy in house, but many don't, so they'll have a limited time to copy it out of the cloud service that's going down. They'll either have to make a very hasty arrangement with another provider or figure out how to build out the storage in-house in short order (and possibly arrange for a lot more bandwidth for a while). It's almost inevitable someone will confidently do it wrong and lose a big chunk of data. Not SUCH a big

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[jbengt]

Amazon and Microsoft (probably Google and Apple too) are at this point a TBTF for all intents. Half the internet does not work without them. There would be no way to deal with any requirement for them the cease operation

I don't believe that in the least.
The internet would continue to operate just fine without them.
Sure, some people/companies would be inconvenienced if they went out of business suddenly, but that can be said about just about any relationship. And it would not be difficult to split them u

Wot?

[nospam007]

Next they'll tell us little fish get eaten by big fish.

The other way 'round is hardly possible.

Prohibit acquisitions

[bradley13]

Honestly, acquisitions by behemoths should be prohibited. They're *already* too big.

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[vakuona]

That might also discourage small startups as well because many of them have an exit strategy that depends on being bought.

FAANG is assnipple

[arrayninx]

that is all