The Federal Trade Commission said that it's expanding a Big Tech antitrust probe into Apple, Amazon.com, Google-parent Alphabet, Facebook and Microsoft. Facebook stock was hardest hit as the major stock market indexes pulled back from record highs, slashing solid intraday gains.
Already, the FTC and Department of Justice have been reviewing past major technology deals that cleared antitrust hurdles, such as Facebook deals for Instagram and WhatsApp. This latest FTC announcement aims at a different breed of acquisition: relatively small deals for which the companies didn't even bother to seek regulatory approval.
Facebook Stock Undercuts Key Support; New Highs For Amazon, Alphabet
The FTC news briefly hit Amazon stock, Alphabet stock, Apple stock, Microsoft stock and Facebook stock. But the stocks recouped most of the modest downdraft. The FTC's broad-ranging review is likely to be time-consuming and doesn't have "a specific law-enforcement purpose," the commission said.
Amazon stock climbed 0.8% and Google stock edged up 0.1%, after both earlier set fresh highs. Microsoft stock turned lower after hitting a record high, sliding 2.3%. Facebook stock lost 2.8%, below its 50-day line, in part due to a Pivotal Research downgrade earlier. Apple stock dipped 0.6%.
How big are these Big Tech stocks? Apple stock, Microsoft stock, Amazon stock and Google stock all boast market caps above $1 trillion. Facebook stock lags with a $595 billion valuation. No surprise that the Dow Jones and other major indexes pared strong intraday gains somewhat on the FTC news. The Dow closed flat, the S&P 500 rose 0.2% and the Nasdaq 0.1%.
Pivotal analyst Michael Levine cut FB stock to sell from hold, reducing his price target to 180 from 215. Levine cited regulation and a deceleration tied to ad-targeting headwinds.
FTC Orders Big Tech To Detail Decade Of Acquisitions
The FTC ordered the five tech giants to submit documents related to acquisitions from 2010 through 2019. "This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition," FTC Chairman Joe Simons said in a statement.
The request for documents is wide-ranging. The FTC is seeking information on corporate acquisition strategies, any noncompete agreements, and post-acquisition outcomes. That includes "whether and how acquired assets were integrated and how acquired data has been treated."
The language hints at concern over a well-known complaint: Big Tech buying out upstarts, only to kill them off. Some industry watchers refer to this as the Big Tech "kill zone."
Antitrust investigations of Big Tech have so far proceeded quietly. However, the FTC reportedly has considered seeking an injunction that would block Facebook's plan to tightly integrate Instagram and WhatsApp. Facebook's integration plan could make it harder to force a breakup later.
In a recent speech, Ian Conner, director of the FTC Bureau of Competition, said that breaking up a Big Tech merger might not be sufficient to restore competition. In that case, he said, the FTC could require a company to share data after a breakup or make it easier for customers to switch to the new business, Politico reported.
