Statement from Stacy Mitchell, Co-Director of the Institute for Local Self-Reliance, on the introduction of the Platform Competition and Opportunity Act of 2021, legislation that would set a high bar for acquisitions and mergers by Big Tech firms.
“For too long, the tech giants have been allowed to use predatory mergers to eliminate their competitors, seize control of pivotal new technologies, and expand their dominance. Big Tech’s track record of unimpeded acquisitions offers one of the most glaring examples of how current antitrust policy has failed America’s entrepreneurs and small businesses.
“We applaud this bi-partisan effort, led by Senators Klobuchar and Cotton, to stand up to Big Tech by introducing legislation that would end these anti-competitive acquisitions and help usher in a more dynamic and innovative economy. Together with other measures, including structural separation and the nondiscrimination legislation, the Platform Competition and Opportunity Act of 2021 will rein in the tech giants’ monopoly power and safeguard the well-being of independent businesses, workers, and local communities.”
As research by ILSR and others has shown, acquisitions have played a key role in the tech giants’ dominance:
- Since their founding, the Big Tech companies—Google, Amazon, Facebook, and Apple—have bought over 600 smaller companies.
- Amazon has used acquisitions to further its dominance by:
- Eliminating upstart rivals — For example, Amazon used predatory pricing schemes to force key rivals Zappos and Diapers.com into selling to Amazon, helping to cement its dominance in online retail;
- Taking control of critical technologies — For example, shortly after Amazon’s acquisition of robotics company Kiva Systems, Kiva stopped supporting its other distribution center clients and turned its technology over exclusively to Amazon, allowing it to corner the market on warehouse robotics.
- Leapfrogging into new markets — Amazon’s acquisitions of the innovative companies and tech behind its Alexa voice assistant, its Eero home WiFi system, its Ring security cameras and numerous other technologies has allowed it to leverage its online retail monopoly into new and emerging industries.
- Researchers have shown that, over the past five years, Amazon, Google, Facebook, Apple, and Microsoft have shut down around half of the apps they’ve purchased. Many of those acquisitions never underwent antitrust review. By 2019, Facebook shut down at least 39 companies — almost half of its total acquisitions.
- What’s more, would-be competitors and investors often decline to start or invest in new businesses in an industry where a monopolist has entered. These “kill zones” stifle entrepreneurship and innovation. As the four tech giants have solidified their market control, start up funding has declined; between 2012 and 2017, the number of “first round funding” fell 22 percent.
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