Today, AAI sent a letter to the U.S. Department of Justice (DOJ) encouraging the Antitrust Division to carefully scrutinize Google’s recently announced $2.6 billion acquisition of Looker. Looker is a leading independent startup in important markets such as data analytics and business intelligence (BI) that are key components of cloud infrastructure. Cloud infrastructure is a rapidly consolidating market in which Amazon Web Services, Microsoft Azure, and Google Cloud hold almost 60% of the market.
AAI’s analysis shows that consolidation in the market for cloud infrastructure features the rapid acquisition of smaller, potential, or nascent rivals. Acquisitions in key cloud infrastructure markets, including data analytics, BI, machine learning, and artificial intelligence, have proceeded rapidly since 2010 and account for almost 20% of all acquisitions by Big Tech from 1998-2018. Google’s acquisition of Looker removes a leading, independent rival in the markets for data analytics and BI. It raises a number of potential competitive questions, any adverse effects of which would be felt primarily by business-to-business customers that purchase cloud-based services, through potentially higher prices, lower quality, less innovation, and less choice.
This letter discusses an important contextual consideration in evaluating the Google-Looker acquisition, namely the fast pace of consolidation in cloud infrastructure markets over the last decade. It suggests that the DOJ consider three ways in which the acquisition could affect competition. These include:
- eliminating Looker as a smaller rival in data analytics and BI markets;
- creating stronger incentives for Google to withhold Looker’s services from rivals post-merger; and
- increasing Google’s incentives to leverage any enhanced market power across its broader cloud infrastructure.