FTC Boss Ready To Breakup Big Tech Firms

eCommerceMarketingSocialMedia

US FTC boss admits he is prepared to break up big name tech firms amid anti-competitive investigation

Big name tech firms have been put on notice after the head of the US Federal Trade Commission used a media interview to confirm he is prepared to break up tech firms.

Speaking to Bloomberg, FTC Chairman Joe Simons said he is prepared to break up major technology platforms if necessary by undoing their past mergers.

Simons is leading a broad review of the technology sector, told Bloomberg that while breaking up a company is challenging, it could be the right remedy to rein in dominant companies and restore competition.

 

Tech break-up

“If you have to, you do it,” Simons reportedly said about breaking up tech companies. “It’s not ideal because it’s very messy. But if you have to you have to.”

The FTC is said to be conducting an investigation into Facebook, including whether the social networking giant acquired startups to thwart competition, according to people familiar with the matter.

US antitrust officials could move to undo the acquisitions even though they previously won approval, Simons reportedly said. The FTC could say “we made a mistake,” he said.

A breakup would require court approval

Facebook acquired Instagram for $1 billion (£760m) in 2012; and it also acquired WhatsApp in 2014 for a staggering $22bn, despite the fact that WhatsApp at the time had a tiny revenue stream.

Critics and antitrust lawyers say that big name tech firms use acquisitions to shut down competition and ensure their domination.

In May this year Facebook co-founder Chris Hughes called for the firm he helped create to be broken up as it has become (in his view) too powerful.

The FTC last month said that Facebook would have to pay a record $5bn fine.

Along with the record fine, Facebook will also have to submit to new restrictions and a modified corporate structure, after ‘repeated violations’ of its 2012 agreement with the FTC.

Multiple investigations

Last month the US Department of Justice (DoJ) said it is to review whether “market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”

The DoJ investigation is to run in parallel with the FTC investigation of large tech firms.

Simons told Bloomberg that an agreement between the FTC and the Justice Department to divide scrutiny of the tech industry is based on specific conduct, not on the companies themselves. One company could potentially be investigated by both agencies, though he declined to provide details about their agreement.

“It’s possible for sure that we could be investigating the same company at the same time but just for different conduct,” he said.

Simons reportedly said, for example, that the FTC could scrutinize Amazon.com for buying a grocer, because of the agency’s expertise in the supermarket sector, while the Justice Department would probably look at, say, the purchase of a music-streaming site.

In June democratic senator and presidential hopeful Elizabeth Warren who has previously warned that tech companies “have too much power over our economy, our society, and our democracy,” said that the head of the antitrust division within the US Department of Justice should not be involved in the competition investigation of Google and Apple.

Do you know all about IT and the law? Take our quiz.

Read also :
Author: Tom Jowitt
Click to read the authors bio  Click to hide the authors bio