Apple buys a company every few weeks. FTC investigates

From Reuters’ “FTC demands data on small buys by Google, Amazon, Apple, Facebook, Microsoft,” posted Tuesday AM:

The Federal Trade Commission has issued special orders to Alphabet Inc’s Google unit, Amazon.com Inc, Apple Inc, Facebook Inc and Microsoft Corp to provide information on mergers that were too small to report to antitrust regulators, the FTC said on Tuesday.

The queries occur as the Justice Department, the FTC, state attorneys general and the House Judiciary Committee are investigating the big tech platforms for potential anti-competitive behavior. They are accused of unfairly using their clout to defend market share or expand into adjacent markets.

Much of the criticism has focused on massive deals such as Facebook’s acquisition of Instagram and Amazon’s purchase of Whole Foods, but the companies also have spent billions on smaller companies, dramatically changing the competitive landscape in emerging tech sectors…

With the exception of its $3 billion purchase of headphone and streaming company Beats in 2014, Apple has mostly made small deals valued at less than $500 million over the past decade, snapping up small companies working on key technologies such as augmented reality displays, camera sensors and artificial intelligence software.

My take: Toward new theory of antitrust—giant mergers good, tiny acquisitions bad.

See also: Apple buys a company every few weeks, says CEO Tim Cook

6 Comments

  1. Gregg Thurman said:
    The theory that buying up small companies deprives the consumer of choice is flawed, in that the technologies all of these small companies are working on require a platform to become a major player.

    At this point, among consumer goods, the platforms are established, and even companies with the resources of Huawei or Samsung (each have a proprietary platform) have chosen not to deploy them.

    Google has even tried to make the browser a platform (ChromeOS) with very little, if any, success.

    Ergo, the platforms for desktops are Windows, MacOS and some flavor of Linux. The platforms for mobile are Android and iOS, iPadOS, WatchOS, and some flavor of Linux. None of the firms Apple has acquired has the resources to reinvent the wheel (OS). More importantly, the consumer isn’t likely to widely adopt a new platform foreign to what is currently available without a major shift in platform technology. Remember Blackberry OS, Symbian and WebOS? It’s possible but highly improbable because of the flexibility (adaptability) of current offerings to adopt a new form factor. It’s software for goodness sake, not hardware.

    Apple’s small acquisitions may have some defensive value, (buy them before Alphabet, Samsung, MSFT or Huawei does which is unlikely), and more likely are shortcuts to features/capabilities Apple wants to deploy in its products.

    It would take a radical interpretation of anti-trust law (books anyone?) to find Apple guilty here.

    I think if Apple were to be found guilty in this case, if it ever came to trial, it will go all the way to SCOTUS.

    3
    February 11, 2020
    • “Google has even tried to make the browser a platform (ChromeOS) with very little, if any, success.”

      You may be overstating Google’s lack of success. I know that when I was sworn in as a city councilor in January, it was a chromebook that the city’s IT department handed me—a chromebook that I have to use for all city business unless I want to risk a possible subpoena of my MacBook. Also, haven’t chromebooks been cleaning Apple’s clock in the education market?

      0
      February 11, 2020
      • Gregg Thurman said:
        Also, haven’t chromebooks been cleaning Apple’s clock in the education market?

        I’m not so sure that belief is accurate. I’ll try to find an article on the subject.

        0
        February 13, 2020
  2. Dan Scropos said:
    Keeping that IP on our soil is good. What’s the alternative? They sell it Huawei or Samsung? I don’t see how that’s better.

    0
    February 11, 2020
  3. Fred Stein said:
    This topic bleeds into so many areas. Scary, but I’ll dive in.

    Monopoly? Not Apple. Like Disney, who controls their theme park experience, Apple controls the iOS, MacOS, and App Store experiences. Apple’s control does nothing to stifle innovation nor competition in its markets. The best example is SmartWatches. There are so many other SmartWatches they marginalize each other, even though the market grew 42% last year. In other categories Apple’s prices are competitive. Fire sale prices in commoditized markets always provide outlier examples for those desperate to make a point.

    Buying small innovative startups. 1) Apple (and the other big four) must do so, if the startups have patents. We all know about the patent trolls. 2) Small innovative startups exist because there are really smart hardworking people who run much faster in a startup than the could in corporation; And because there are VCs and Angels to fund them. More than 90% of startups that don’t fail get acquired. That’s just the way it is. That’s fine.

    Wealth creation and the inequities in our economy. While this can lead to divisive political views, we should find ways to keep up our and wealth creation innovation, while addressing the inequities. We have to be wary which legal tools we use. If we stifle our wealth creation and innovation, it goes elsewhere; And we in US, lose. We’d end up like France who has to fine Apple $27M for a bogus claim. (We do need better collaboration with the tech community and Washington figure out what to regulate and how. Tech and VCs move too fast for Washington. It’s tough.)

    4
    February 11, 2020
  4. Joe Murphy said:
    @ PED: “My take: Toward new theory of antitrust—”

    The Apple e-book fiasco seems to fit in this category, what do you think?

    0
    February 12, 2020

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