The chair of the US Federal Trade Commission (FTC), Chairman Joe Simons, acknowledged in an interview on Tuesday that perhaps maybe, just maybe, one outcome of an FTC task force inquiry into whether tech giants violated American anticompetition laws could be forcing them to break up into smaller companies, according to reports in Reuters and Bloomberg.
The likes of Facebook probably aren’t quaking in their boots yet. Simons—who perhaps has his hands tied by the ongoing status of his agency’s broad review of the tech sector, but whose agency was accused of coddling Facebook in a recent privacy settlement—more or less merely acknowledged that it was technically within his power to pursue corporate breakups.
“If you have to, you do it,” Simons told Bloomberg. “It’s not ideal because it’s very messy. But if you have to you have to.”
As Bloomberg noted, the FTC task force has seemed particularly interested in whether Facebook secured its current form as a globe-spanning behemoth by buying up subsidiaries like Instagram and WhatsApp for the sole purpose of eliminating competition. The US Department of Justice has launched its own antitrust investigation of the tech sector that appears to have overlap with the FTC one, though Simons offered few details about how the agencies were coordinating.
“It’s possible for sure that we could be investigating the same company at the same time but just for different conduct,” Simons told Bloomberg.
However, he did reiterate to Bloomberg that Facebook’s 2012 acquisition of Instagram is a particularly open question to the FTC as of now:
Simons didn’t confirm details of the Facebook investigation beyond what the company disclosed in July, when it said that the FTC had initiated a broad probe into several business lines — social media, digital advertising and mobile applications. Any inquiry into its past acquisitions would focus on what would have happened to those companies if they hadn’t been bought by Facebook, Simons said.
“There’s a question about what caused Instagram to be as successful as it is,” Simons said. “Was it the fact that the seed was already there and it was going to be germinated no matter what or was the seed germinated because Facebook acquired it?”
The consolidation of the tech sector in recent years and growing hostility to companies like Amazon, Apple, Facebook, and Google in DC certainly seems to have put the issues of scale and competition in the spotlight, and both leading Democratic candidates for America's presidency such as Elizabeth Warren and Donald Trump’s administration have urged regulators to step in. (In the case of Trump, the anger clearly has more to do with conspiratorial and baseless accusations that tech companies are secretly backing Democrats than it does... any other coherent motive.) But there’s reason to be sceptical whether this is all just talk or the FTC and DOJ investigations will actually result in breakups anytime soon.
As the Verge noted, the growing backlash to tech consolidation follows a long time period in which competition and antitrust watchdogs did basically nothing to stop it—and the pendulum is only slowly swinging back in the other direction. In June, New Street Research analyst Blair Levin told the Information that “any concrete action and coherent thinking on these things” is likely to take at least a year and a half to materialise, meaning America's next presidential administration. [Bloomberg/Reuters]
Featured image: Jose Luis Magana (AP)