New Analysis from AAI Shows a Weak Record of Antitrust Enforcement in Big Tech — Calls for Stronger Presumptions for Acquisitions of Smaller, Potential, and Nascent Rivals

AAI issued a new White Paper today, providing in-depth analysis of an important component of a broader assessment of the competitive issues surrounding Big Tech, or the five largest multinational online service or computer hardware and software companies — Amazon, Apple, Facebook, Google, and Microsoft. AAI’s analysis focuses on Big Tech’s acquisition of over 720 smaller, potential, and nascent rivals over almost the last three decades.

The White Paper, “The Record of Weak U.S. Merger Enforcement in Big Tech,” takes a closer look at enforcement data for one major Big Tech industry category reveals that while the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) appear to have subjected a higher than average number of transactions to more extensive agency investigation, only one deal has been challenged in federal court. It does not come as a surprise therefore that the record of U.S. merger enforcement in an important Big Tech industry category is far lower than the record across all sectors, as defined by the rate of merger challenges in federal court. This statistic warrants further inquiry.

AAI notes that the debate over the size and alleged dominance of Big Tech companies has promoted wide-ranging proposals to use the antitrust laws to break them up. These proposals are not driven by a methodological, fact-based analysis. Such analysis would explore the strategic competitive abilities and incentives that are specific to different Big Tech business models, how the companies compete in a variety of individual markets and clusters of related markets, and how alleged conduct potentially runs afoul of the U.S. antitrust laws. Breakup proposals therefore “put the cart before the horse” and fail to provide needed support for more vigorous antitrust enforcement and beneficial reform proposals.

AAI’s analysis is one of the first fact-based assessments and analysis of the series of Big Tech acquisitions that would support more vigorous enforcement and beneficial reform proposals. The White Paper analysis explores the various reasons why enforcement might be weaker in Big Tech and the policy implications raised by those explanations. Namely, competitive concerns arising in some Big Tech acquisitions that eliminate smaller, potential, or nascent rivals raise concerns are cognizable under antitrust law but may not be reachable in practice because evidentiary standards are currently too high. Stronger presumptions are therefore needed.