Tradeoffs and anti-trust policy

Life is full of tradeoffs. Even in anti-trust policy, which is supposed to make our economy more competitive.

See FTC Antitrust Probe of Facebook Scrutinizes Its Acquisitions: Regulators examining whether social-media giant bought companies to neutralize possible rivals. Excerpts:

"The Federal Trade Commission is examining Facebook Inc. FB -1.92% ’s acquisitions as part of its antitrust investigation into the social-media giant, seeking to determine if they were part of a campaign to snap up potential rivals to head off competitive threats, according to people familiar with the matter."

"FTC investigators are examining whether the company and its CEO, Mark Zuckerberg, purchased technology startups to keep them from challenging Facebook’s empire, the people said, some of whom added that the FTC has begun reaching out to the founders of such companies."

"The tech giant has acquired about 90 companies over roughly the last 15 years"

"Among those companies are the photo-sharing app Instagram and the messaging service WhatsApp, which bolstered Facebook as a dominant force in social media and messaging."

"In congressional testimony last month, Matt Perault, director of public policy at Facebook, told a House antitrust subcommittee that the company’s acquisitions have fueled innovation and brought together firms of complementary strengths."

"Companies purchased by Facebook “have had more opportunity to innovate as part of Facebook than they would have on their own—enhancing users’ experience and resulting in more choice for more people overall, not less,” Mr. Perault said."

"Other tech giants, such as Alphabet Inc. ’s Google, also have been on buying sprees. The top five tech firms have made more than 400 acquisitions over the last decade"

"When the commission formed a task force in February to examine potential antitrust violations in the tech industry, Bruce Hoffman, director of the FTC’s bureau of competition, said the issue was ripe for exploration.

“This is a completely legitimate and real theory of competitive harm,” he said last year, while stressing that the FTC would need “an evidentiary and economic basis” for determining that an acquired startup really could have become a significant competitor.

Mr. Hoffman acknowledged the potential negative consequences of cracking down on such acquisitions: Large tech firms may be able to move startup technologies to market more quickly, and capital markets for startups could shrink if the opportunity to be purchased by a big tech company is constrained, he said."