Over the course of two hours, senators on both sides of the political aisle raised concerns about certain tech companies becoming too dominant in their markets by buying or killing any smaller rival that might pose a threat.
Sen. Marsha Blackburn, a Republican from Tennessee, said there is potential for tech companies to use the vast power of their platforms to “drive out competition.” Sen. Richard Blumenthal, a Democrat from Connecticut, went a step further. “Google and Facebook have misused their monopolistic powers. It’s not against the law to be big. It is against the law to misuse that power in a predatory way.” Blumenthal argued they’ve done just that by “suffocating competition.”
“I think everyone is feeling the jitters”
Inside the tech industry, there is predictable skepticism about the thinking behind these calls for greater antitrust enforcement.
“You take your crown jewel companies and try to chop them up?” said Gary Shapiro, president and CEO of the Consumer Technology Association, which represents more than 2,200 tech companies. “This is just pure poppycock populism.”
But some in the industry are nonetheless reconsidering how they do business in this new era of antitrust fears, even if the political rhetoric doesn’t end up translating into stricter regulatory enforcement. Tech companies are said to be thinking twice about pursuing splashy acquisitions, according to interviews in recent months with venture capitalists, former tech M&A execs and public policy officials.
“Tech companies, both big and small, are thinking more about the potential antitrust risk in their M&A activity,” said Logan Breed, an antitrust partner at Hogan Lovells, a law firm that has advised tech companies. “I think everyone is feeling the jitters.”
For big companies, the perception of further consolidating power with a billion-dollar acquisition could once again turn them into lightning rods for politicians. For startups looking to get acquired, there’s a fear that deals could be held up for longer, during which time employees and customers may flee.
“If [Rep. Alexandria Ocasio-Cortez] blasts you on Twitter, or if Warren talks about an acquisition as dangerous, that’s going to put up a speed bump, even if the regulators might approve it,” said Stewart Verdery, a lobbyist with Monument Policy Group, which works with Amazon and Microsoft.
“You’ve got antitrust by tweet as an important factor,” he said.
Google declined to comment on this story. Representatives for Facebook, Amazon and Apple did not immediately respond to requests for comment.
Silicon Valley tries to adapt to a new normal
Thanks in part to successful acquisitions, the big tech companies have only gotten bigger. Microsoft, Amazon, Apple, Facebook and Google’s parent company are the top five most valuable businesses in the world. Meanwhile, since the 2016 election, internet giants like Facebook and Google have been embroiled in a series of PR crises over data privacy, the role their platforms played in election meddling and the spread of fake news, raising concerns about the impact these powerful businesses are having on society.
David Vladeck, the director of the FTC’s Bureau of Consumer Protection from 2009 to 2012, said Facebook’s “debacles,” Amazon’s “growing market power” and the “truly monopolistic power” of Google “have started to worry people.” The concern, he said, is that “the barriers to entry are just impossible to overcome, and we’ve got these tech giants that are very difficult to regulate, and may not be responding as well as they should to consumer preferences.”
This shift could continue into the 2020 elections, as tech companies may quietly root for Republicans to hold onto power, despite their left-leaning employee base, for fear that progressive Democrats could be more aggressive in pursuing antitrust enforcement.
For tech companies looking to be acquired, or continue making big acquisitions, “the current antitrust lineup is better,” Verdery said. “What 2021 looks like is an unknown at best.”