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FTC Chair: Companies Buying Startups Could Be Seen As Anti-Competitive

Joe Simons, chair of the U.S. Federal Trade Commission (FTC), said antitrust enforcers should be on guard against dominant companies buying emerging startups, Bloomberg reported.

That, according to the report, shone a light on one of the central issues in the agency’s investigation of Facebook. In a speech quoted by Bloomberg, Simons said those deals could be harmful to consumers.

“A monopolist can squash a nascent competitor by buying it, not just by targeting it with anti-competitive actions,” Simons said at an American Bar Association event, according to Bloomberg. “It may be easier and more effective to buy the nascent threat, only if to keep it out of the hands of others.”

Simons said it is important that the U.S. be “willing and able to recognize that harm to competition might not be as obvious from a look at the marketplace as it stands currently,” and that a “static picture” would risk doing away with future benefits from competition.

The Facebook investigation by the FTC is close to being done after beginning last year, and it could lead to a lawsuit for the social media giant’s habit of buying up rival social media companies like Instagram and WhatsApp that gain steam.

Ohio Attorney General David Yost has levied similar complaints against Google, saying that both Facebook and Google have a habit of co-opting challengers online.

Yost, quoted by Bloomberg, said that strategy “prevents any competitor from growing big enough to challenge Facebook and Google’s market dominance.”

Facebook’s counter-argument is that both Instagram and WhatsApp faced other competitors, too, and that Facebook’s investments helped to make them successful.

PYMNTS has written about the idea of Big Tech companies holding monopolies, opining that companies like Facebook, Google, Amazon and Apple are competing aggressively with each other instead of acting like monopolies.

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