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 Killer Acquisitions and the Death of Competition in the
Digital Economy

Mikah Roberts*

I. INTRODUCTION

"It is better to buy than to compete."' This quote by Mark

Zuckerberg evidences a rising trend in the digital economy over the last

decade. According to the House Judiciary Committee's report, Investigation

of Competition in Dzgital Markets, from 2009 to 2019, Google, Apple,

Facebook, and Amazon ("GAFA") made more than 300 global

acquisitions combined.2 As of September 2020, the total value of these

four companies was more than $5 trillion. 3 In its report, the House

Judiciary Committee also determined that a large percentage of the

acquisitions made by GAFA were either killer acquisitions or nascent

potential competitor acquisitions. 4

* Associate, Husch Blackwell LLP Juris Doctor, The University of Tennessee College
of Law.
1 First Amended Complaint for Injunctive and Other Equitable Relief at 1, Federal

Trade Commission v. Facebook, Inc., No. 1:20-cv-03590-JEB (D.D.C. Aug. 19, 2021)
[hereinafter First Amended Complaint Against Facebook].
2 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND ADMINISTRATIVE LAW OF THE
COMM. ON THE JUDICIARY, INVESTIGATION OF COMPETITION IN DIGITAL MARKETS
406-446 (2020),
https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf
[hereinafter HOUSE REPORT].
While many economists analyze the Big Five-Google, Apple, Facebook, Amazon, and
Microsoft-this paper will focus only Google, Apple, Facebook, and Amazon.
3 Id. at 10.
4 Id. at 11.
62 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

In this paper, I argue that merger law, as currently construed by

the courts, fails to prevent dominant technology platforms from acquiring

nascent competitive threats and engaging in killer acquisitions.

This issue is timely in that it will not self-correct. Clayton 7, as

currently interpreted by United States courts, places a nearly impossible

burden of proof on the antitrust enforcement agencies to predict future

anticompetitive outcomes of acquisitions.5 Because of the challenges

associated with meeting the required evidentiary burdens, the Federal

Trade Commission and Department ofJustice (the "antitrust enforcement

agencies" or the "agencies") have been hesitant to challenge acquisitions

by GAFA and have been largely unsuccessful in the few they have

challenged. As a result of the law's underdeterrent effects, legislators

across the country are proposing to expand and amend Clayton 7 in

hopes of more adequately preventing dominant technology platforms

from engaging in these anticompetitive acquisitions. 7

If the issue is left unaddressed, these dominant technology

platforms will continue defending their market positions by acquiring and

killing off start-up companies. Such acquisitions have proven harmful to

5 See infra PartIII.

6See infra PartIII.
7 Cecilia Kang, Lawmakers, Taking Aim at Big Tech, Push Sweeping OverhaulofAntirrust,
N.Y. TIMES (June 29, 2021), https://www.nytimes.com/2021/06/11/technology/big-
tech-antitrust-bills.html; see also infra Part IV.
8 See infra Part II(d).
2022 Killer Acquisitions 63

innovation in that they discourage start-ups from entering the market.'

Without new entrants, innovation competition has waned, allowing

GAFA to abuse consumer data privacy.1 0 As these dominant platforms

continually gain access to data, they become more powerful and more

equipped to neutralize competitive threats through acquisitions." Until

antitrust enforcement agencies have a viable means by which to adequately

challenge acquisitions by dominant technology platforms, these issues will

continue damaging the American digital economy and its consumers.

In Part II of this paper, I define killer acquisitions and acquisitions

of nascent competitive threats, outline how these acquisitions have

harmed the digital economy, explore the specific characteristics of the

digital economy that have made it susceptible to such harms, and cite the

most recent evidence of market dominance by GAFA.

Part III analyzes Clayton 7, its current interpretation and

application by United States courts, and the difficulties such

interpretations have created in challenging acquisitions by dominant

technology platforms specifically. This part also explores the Federal

Trade Commission's recent lawsuit against Facebook-which

9 RAGHURAM RAJAN ET AL., KILL ZONE 21,2 (2021).

10 HOUSE REPORT, supra note 2, at 51.

1 See infra Part II(d).
64 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

retroactively challenged the company's acquisitions of Instagram and

WhatsApp-and reveals the likely reasons why acquisitions by GAFA

have largely gone unchallenged.

Part IV discusses a recent legislative proposal aimed at deterring

further killer acquisitions and acquisitions of nascent competitive threats

by dominant technology platforms: The Platform Competition and

Opportunity Act of 2021. This part dissects the act, analyzing the ways it

could invigorate antitrust enforcement, its likely impact if it had been

enacted prior to Facebook's acquisitions of Instagram and WhatsApp, and

the criticisms it will likely face.

Lastly, Part V concludes this paper.

II. ANTICOMPETITIVE ACQUISITIONS AND THE

DOWNFALL OF THE DIGITAL ECONOMY

Google, Apple, Facebook, and Amazon have used killer acquisitions

and acquisitions of nascent competitive threats to increase their market

dominance and neutralize competitive threats. 2 The use of such

anticompetitive acquisitions has weakened innovation in the digital

economy, harming both entrepreneurs and consumers and making entry

into the market nearly impossible. 3

12 See infra Part II(d).

13 See infra Part II(b)-(c).
2022 Killer Acquisitions 65

A. KILLER ACQUISITIONS AND ACQUISITIONS OF NASCENT

COMPETITIVE THREATS

Killer acquisitions take place when a dominant firm "acquire[s] an

innovative target and terminate[s] the development of the target's

4
innovations to preempt future competition." Alternatively, a dominant

firm might acquire a target company and then "kill-off its own internal

efforts to develop a competing product," thereby removing the potential

risk of competition to its newly acquired subsidiary. 5

Acquisitions of nascent competitive threats, on the other hand,

take place when a dominant firm acquires "young firms with products or

services whose competitive significance remains highly uncertain."'6 The

competitive significance of such young firms is uncertain either because

their presence in existing markets overlaps only slightly with that of the

14 COLLEEN CUNNINGHAM ET AL., KILLER ACQUISITIONS

1 (2020),
https://deliverypdf.ssrn.com/delivery.php?ID=75602107202412209612408309500201
706901503200905105400402200711802503112409409606607800705200302303001405
509112510610809207112605602208803209312708312308607908803007103300409109
208210901007408509209902107508309410011212706609502808602207207010512609
4&EXT=pdf&INDEX=TRUE.COLLEEN CUNNINGHAM ET AL., KILLER
ACQUISITIONS 1 (2020),
https://poseidon01.ssrn.com/delivery.php?ID=37409601300109612311911808207112
106910107301002806102510008003002901309308503100800003203003300811111100
702511600508012700311504405703700604708300101908507700807600001104903012
210709409409308712407100207111912211000412111900608301712007501811607211
9&EXT=pdf&INDEX=TRUE.
15 CHRIS PIKE, START-UPS, KILLER ACQUISITIONS AND MERGER CONTROL 6 (2020),
https://one.oecd.org/document/DAF/COMP(2020)5/en/pdf [hereinafter OECD
REPORT].
16 Id.
66 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

dominant firm or because they do not currently overlap with the dominant

firm but have the potential to do so in the future.1 7 In these situations, the

dominant firm is concerned that a young firm might eventually grow its

product into a competitive threat. 8 Thus, by acquiring the young firm

before its product becomes a rival, the dominant firm can minimize the

potential of future competitive harm and use the young firm's product to

further its business. 9

These two types of acquisitions have allowed dominant

technology platforms to gain more power through greater market

dominance. 20 The more powerful these few companies become, the more

harm that will be caused to both entrepreneurs and consumers.

B. COMPETITIVE HARMS AND THE IMPACT ON ENTREPRENEURS

AND CONSUMERS

Market dominance by GAFA, as is being achieved through killer

acquisitions and acquisitions of nascent competitive threats, has been

harmful to entrepreneurs and consumers in two major ways. First,

GAFA's market dominance has weakened innovation such that it has

created a "kill zone" where dominant technology platforms are insulated

"from competitive pressure simply because investors do not see new

17 Id
18 Id at 7.
19 Id.
20 See infra Part II(d).
2022 Killer Acquisitions 67

entrants as worthwhile investments." 2' Second, GAFA's market

dominance has led to inadequate privacy and data protections for

consumers.22

i. Weakened Innovation and the Creation of a Kill Zone

Competition is vitally important to innovation because it forces

companies to continually improve their products and services, lest

consumers switch to competitors that offer more attractive choices. 2 3

Often, new entrants into the market spur innovation competition. 24 Start-

up companies enter the market with new ideas, requiring pre-existing

market participants to either improve their products and services or lose

customers. 5

GAFA's market dominance in the digital economy, as obtained

through the use of killer acquisitions and acquisitions of nascent

competitive threats, has allowed it to drive start-ups out of the market.26

As Google, Apple, Facebook, and Amazon have continued acquiring new

market entrants, the digital economy has seen a "sharp decline in new

21 HOUSE REPORT, supranote 2 at 18, 46.https://ssrn.com/abstract-3555915.

22 Id. at 51-52.
23 Id. at 46.
24 KEN BUCK, THE THIRD WAY: ANTITRUST ENFORCEMENT IN BIG TECH 10 (2020)
[hereinafter BUCK REPORT].
https://buck.house.gov/sites/buck.house.gov/files /wysiwyguploaded/Buck%20Rep
ort.pdf
25 HOUSE REPORT, sufranote 2, at 46.
26 Id.
68 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

business formation as well as early-stage start-up funding." 27 The House

Judiciary Committee's report notes that the "entrepreneurship rate" in the

technology industry has declined from 60% in 1982 to 38% in 2011.28 The

decline of new entrants in the digital market has led to decreased

innovation competition, allowing the dominant technology platforms to

control innovation "rather than being creatively spread across directions

chosen by entrants."" As is discussed further in subsection (ii), the lack of

competitive pressure, and GAFA's control of innovation in the digital

economy has led to inadequate privacy protections for consumers.30

This lack of innovation competition has also created what

economists refer to as a "kill zone," where venture capitalists are

discouraged from investing in digital market entrants and, in turn,

entrepreneurs are discouraged from attempting to enter the digital

marketplace. 31 First, venture capitalists are discouraged from investing

because GAFA possesses monopoly power that a new entrant is highly

unlikely to overcome due to the unique characteristics of the digital

market.32 Second, venture capitalists are discouraged from investing

27 Id
28 Id at 47.
29 See id. at 50 (quoting Innovation and EntrepreneurshipHearingsat 81 (statement of Fiona
Scott Morton, Theodore Nierenberg Prof. of Econ. Yale Sch. of Mgmt.).
30 HOUSE REPORT, supra note 2, at 50-52; UNLOCKING DIGITAL COMPETITION, infra
note 52, at 50; see also infra Part 11(b) (ii).
31 RAJAN, supra note 9, at 2.
32 HOUSE REPORT, supra note 2, at 48 (quoting Venture Capital and Antitrust Workshop
Transcript at 24 (statement of Paul Arnold, Founder & Partner, Switch Partners)).
2022 Killer Acquisitions 69

because of the likelihood that a new entrant will be acquired by GAFA. 33

When antitrust authorities fail to block a merger by one of the dominant

technology platforms, "it signals that there is a higher likelihood that other

similar acquisitions will not be blocked." 34 In their paper, "Kill Zone,"

Raghuram G. Rajan, Luigi Zingales, and Sai Krishna Kamepalli note that,

"[i]n the three years following an acquisition by Google or Facebook in a

certain industry sector, [venture capital] investments in that sector ... drop

by over 40%."3

They argue that this issue is exacerbated by the multi-sided nature

of digital platforms. 36 Digital platforms serve customers on one side and

advertisers on the other.37 Customers are not charged monetary fees to use

digital platforms, thus, customers are incentivized to adopt a new digital

platform through network effects. 3 Network effects, as is discussed in

subsection (c), exist when a product becomes more valuable as it is used

by more people.39 Here, customer incentive to adopt a new digital platform

33 RAJAN, supranote 9, at 2.
34 Id. at 2.
35 Id. at 2.
36 Id. at 3; see also UFUK AKCIGIT ET AL., INTERNATIONAL MONETARY FUND, RISING
CORPORATE MARKET POWER: EMERGING POLICY ISSUES 25
(2021)https: //www.imf.org/en/Publications/Staff-Discussion-
Notes/Issues/2021/03/ 10/Rising-Corporate-Market-Power-Emerging-Policy-Issues-
48619 [hereinafter IMF REPORT].
37 RAJAN, supranote 9, at 3.
38 Id at 3.
39 HOUSE REPORT, supranote 2, at 40; see also infra Part II(c).
70 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

depends largely on adoption by early app developers. 4 When a new digital

platform, such as a social media platform, enters the market, early app

developers can adopt the platform by adapting their apps to be compatible

with the platform. 41 As more app developers' applications become

compatible with a new platform, ordinary consumers are incentivized to

use that platform as well. 42

However, when an app developer anticipates that a new digital

platform will rapidly be acquired by a dominant technology firm, they are

discouraged from investing their time and resources into adopting the

platform. 43 This dilemma exists because when an entrant platform is

acquired by a dominant platform like GAFA, the dominant platform

integrates the new platform into its existing technology. 44 Thus, any app

developers' apps that were already compatible with the dominant platform

will automatically become compatible with the acquired entrant platform

as well. 45 Because app developers have come to anticipate mergers soon

after a platform's entry into the market, they have been slow to adopt the

40 RAJAN, supra note 9, at 3.

41 Id. at 3.
42 Id.
43 Id. at 4.
44 Id.
4s Id.
2022 Killer Acquisitions 71

new platforms." As a result, ordinary customers are not incentivized to

adopt the new platform. 47

The decline of investment and entry into the digital market has

allowed dominant technology platforms to face very little competition. 48

Without competition incentivizing improvement, innovation has stalled.49

The decline in innovation and the devastating impacts this decline has on

the digital economy can be seen in the inadequate privacy protections

being offered by GAFA.50

ii. Inadequate Privagy Protections

Market power is typically defined as "the ability to raise prices

without a loss to demand." 5 However, because digital platforms typically

do not charge monetary fees to customers, market power takes a different

form.52 Rather than impacting prices charged, market power in the digital

46 Id.
47 Id at 3.
48 HOUSE REPORT, supranote 2, at 46-47
4 Id. at 47.
50 Id. at 52 (quoting Giuseppe Colangelo & Mariateresa Maggiolino, Data Protection in
Attention Markets: Protecting Privacy through Competition?, 8 J. OF EUR. COMPETITION L.
&

PRACTICE 363, 365 (2017)).

51 Id. at 51. (citing W. KIP VISCUSI ET AL., ECONOMICS OF REGULATION AND
ANTITRUST 164 (3d ed. 2000)).
52 Id.; see also THE DIGITAL COMPETITION EXPERT PANEL, UNLOCKING DIGITAL
COMPETITION 4 (2019),
.https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attach
mentdata/file/785547/unlocking-digitalcompetitionfurman_review web.pdf
72 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

market impacts "the degree to which platforms have eroded consumer

privacy without prompting a response from the market.""

Absent competitive threats, dominant technology platforms are

not motivated to offer sufficient privacy protections.54 Dominant

platforms then benefit from the lack of customer privacy protections

because, in turn, the platform has greater access to customer data.55 The

House Judiciary Committee's report noted that dominant technology

platforms have abused customer privacy by hiding their data collection

practices "in dense and lengthy disclosures," by tricking customers into

consenting to tracking through "[t]he use of manipulative design

interfaces," and by using customers' personal data for personalized

advertising "with no or limited controls available to consumers."56 As is

discussed further below, access to data allows dominant platforms to

maintain and increase their market power. 57 Thus, start-ups that attempt

to enter the digital market and offer more rigorous privacy protections for

53 HOUSE REPORT, supra note 2, at 51

54 Id. at 52; see also UNLOCKING DIGITAL COMPETITION, supranote 52, at 50.
55 HOUSE REPORT, supra note 2, at 52.
56 Id. at 52-53. (quoting Colangelo & Maggiolino, supranote 50, at 365; and then citing
Arvind Narayanan, Arunesh Mathur, Marshini Chetty & Mihir Kshirsagar, Dark
Patterns:Past, Present, andFuture, 18(2) ACM QUEUE 67, 77 (2020)
https://queue.acm.org/detail.cfmiid=3400901).
57
1d. at 44; see also discussion infra Part II(c).
2022 Killer Acquisitions 73

customers are disadvantaged by their lack of access to data and are driven

out by the dominant platforms.58

The unique characteristics of the digital market, some of which

have already been discussed, have made it especially vulnerable to these

competitive harms."

C. CHARACTERISTICS OF THE DIGITAL MARKET

Digital markets are uniquely susceptible to the previously

discussed competitive harms because, in addition to containing multi-

0
sided platforms, they are characterized by strong network effects, high

switching costs, data accumulation, and economies of scale and scope. 6

'
i. Network Effects

Direct network effects exist when a product or service becomes

more valuable as more people use that product or service. 2

For example,

Facebook becomes more valuable to the individual user when more of the

user's family members and friends are also on Facebook. 63 Similarly,

Amazon Marketplace becomes more valuable as more buyers and sellers

use the platform because buyers have access to a greater range of products,

58 HOUSE REPORT, supra note 2, at 48; see also UNLOCKING DIGITAL COMPETITION,
supra note 52, at 4.
59 See infra Part II(c).
60 Rajan et al., supra note 9, at 3.
61 HOUSE REPORT, supra note 2, at 40-46; IMF Report, supra note 36, at 25.
62
1d. at 40
63 Id. at 41
74 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

and sellers are more likely to sell their products." Direct network effects

in digital markets facilitate monopoly formation because they make it

difficult for newcomers to enter the market and adequately compete. 7 A

new social media platform, online marketplace, or search engine can only

effectively compete if it has enough users to make its service valuable."

Because digital markets are characterized by these strong network

effects, they are "subject to 'tipping' in which a winner will take most of

the market." 6 7 As discussed above, direct network effects and tipping

facilitate the "kill zone" because when investors and early app developers

are discouraged from investing in a new digital platform, ordinary

customers are unlikely to adopt the platform.68 Without such early

adoption by customers, a digital platform is unlikely to stand a chance at

competing with GAFA."

ii. Switching Costs

Digital markets are also characterized by high switching costs,

meaning that users face difficulties in switching away from a dominant

firm's product to a new product. 70 For example, users who engage with

Facebook contribute a significant amount of time and data to building

64 Id
65 Id
66 Id.

67 UNLOCKING DIGITAL COMPETITION, supranote 52, at 4.

68 See supra Part II(b)(i).
69 Rajan et al., supra note 9, at 3.
70 HOUSE REPORT, supra note 2, at 41.
2022 Killer Acquisitions 75

their profiles, connecting with friends, uploading pictures, and sharing

personal information. 71 If a user decides to switch to a different social

network, they cannot import their Facebook profile into that new

network; instead, they must "start from scratch, re-uploading H photos

and re-entering H personal information to the new platform."7 2 Similar

difficulties exist for sellers on Amazon, as they cannot easily transfer their

Amazon product reviews and ratings to a new online marketplace. 73

These high switching costs create "lock-in," where users remain

with the dominant firm out of convenience, even though they would

prefer to switch to another firm's product or service. 74 Lock-in is another

significant barrier to entry for start-up firms in the digital market. 75

iii. DataAccumulation

Data accumulation is an essential part of competing in the digital

market.76 Data accumulation is "self-reinforcing."" Companies with

access to large amounts of data can "use that data to better target users or

improve product quality," thus attracting more users, which allows the

71 Id at 42.
72 Id
73 Id
74 d at 41-42
75 d at 42.
76 I. at 43; see also IMF Report, supra note 36, at 26.
77 HOUSE REPORT, sufra note 2, at 43.
76 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

company to accumulate more data.78 This "advantageous feedback loop"

poses a significant barrier to entry for new firms that have few users and

minimal access to data.79 Additionally, data advantages assist dominant

platforms in identifying and acquiring rivals before they become

significant competitive threats. 0 As noted in the House Judiciary

Committee's report-Google has used Android's operating system to

track third-party apps, Facebook has used its platform to "identify and

then acquire fast-growing third-party apps," and Amazon has used data

from third-party merchants to "inform [its] own private label strategy." 8

'
Additionally, Apple has been pre-installing its "Find My" app, an app that

tracks the phone's location, on iPhones, in such a way that users can only

opt out of the location tracking if they go through the phone's extensive

menu settings.82

In turn, dominant technology platforms are not motivated to

provide adequate privacy protections for consumers, and, without

innovation competition from market entrants, dominant platforms

continue gaining power despite the inadequacy of the protections they

offer.83

78 Id.
79 Id at 42-43.
80 Id at 44.
81 Id. at 378.

82 Id. at 357.
83 Id. at 51; see also IMF Report, supra note 36, at 24-25.
2022 Killer Acquisitions 77

iv. Economies of Scale and Scope

Finally, digital markets are susceptible to monopolization because

of economies of scale and scope.84 Entry into digital markets is expensive

on the front end, but successful entrants enjoy increasing returns to scale,

meaning that "as [their] sales increase, [the] average unit cost decreases."85

For example, Facebook faced significant upfront costs in the construction

of its platform but does not face increasing costs as more users join the

platform.86 Instead, its average unit cost decreases with each new user it

gains.8 7 Dominant technology platforms also enjoy economies of scope in

that, once a firm has "sufficient technical expertise or access to consumer

data, the cost of applying this resource into a new market is relatively

low."" While many dominant technology platforms do not charge money

for their consumer services, they benefit significantly from the

accumulation of user data.89 This data accumulation makes it easier for

dominant firms to maintain their market shares while simultaneously

creating an incredibly high cost of entry for start-up firms. 90

84 HOUSE REPORT, supranote 2, at 45; see also IMF Report, supra note 36, at 25.
85 HOUSE REPORT, supranote 2, at 45.
86 Id
87 Id
88 Id
89 Id at 45-46.
90 Id
78 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

These four characteristics have made the digital market uniquely

susceptible to competitive harm and have facilitated Google, Apple,

Facebook, and Amazons' accumulation of market power.9

'
d. EVIDENCE OF MARKET DOMINANCE BY GAFA

Google, Apple, Facebook, and Amazon each benefitted from being

early entrants into the digital market. As these dominant platforms have

developed their products and accumulated data over the last several years,

the unique evolving characteristics of the digital economy have allowed

them to maintain their dominant positions and have facilitated their

acquisitions of start-up firms before such firms could grow into legitimate

competitors.9 2 Recent statistics from the House Judiciary Committee's

report show that much of GAFA's growth over the years is attributable to

the firms' uses of acquisitions.93

First, the House Judiciary Committee report showed that Google

has acquired over 260 companies in twenty years.94 Google dominates the

online search market, making up over 87% of U.S. searches and over 92%

of global searches.95

91 HOUSE REPORT, sufra note 2, at 40-46.

92 HOUSE REPORT, sufra note 2, at 40-46.
9 Id.
94 Id. at 174.
95 Id. at 176.
2022 Killer Acquisitions 79

Next, the Committee found that Apple has acquired over 100

companies in the last twenty years.96 In 2019, Apple's CEO Tim Cook

stated that Apple buys a new company every two to three weeks and that

Apple's "approach on acquisitions has been to buy companies where

[they] have challenges, and IP, and then make them a feature of the

phone."97

Concerning Facebook, the Committee found that the company

has acquired at least 63 companies since its founding in 2004, including

Instagram, WhatsApp, Atlas, LiveWire, and Onavo.98 Facebook has

maintained an extremely high market share, with its products making up

three of the seven most popular apps in the United States." Additionally,

Facebook's senior executives have called Facebook's acquisition strategy

a "land grab" to "shore up [their] position," evidencing their intention to

use acquisitions as means by which to avoid competitive threats.'

Lastly, the Committee found that Amazon has acquired over 100

companies in the last twenty years.11 Amazon made several large

acquisitions in recent years, including Ring, Zappos, IMDB.com, Audible,

96 Id. at 414-423.
97 Id at 337.
98 HOUSE REPORT, supra note 2, at 149.
99 Id. at 136.
100 Id. at 149.
101 Id. at 261.
80 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

and Goodreads, with its largest acquisition occurring in 2017 when it

purchased Whole Foods for $13.7 billion.102

3
Laws aimed at limiting anticompetitive mergers certainly exist.1

However, the interpretation of such laws in U.S. courts has created an

environment where dominant technology platforms can engage in

anticompetitive mergers with very little accountability.10 4

III. THE EVOLUTION OF CLAYTON 7

a. CLAYTON 7

Section 7 of the Clayton Act currently addresses acquisitions by

dominant firms.10 5 Enacted in 1914 and last amended in 1996, Clayton 7

prohibits mergers or acquisitions that may have the effect of substantially

lessening competition or tending to create a monopoly.10 6 The statute

applies to acquisitions of stock, assets, or non-corporate interests and

exempts certain acquisitions, including those solely for investment.107

Additionally, the Hart-Scott Rodino Act, also known as Clayton Act

7A, establishes notification requirements and a waiting period for persons

that plan to acquire the stock or assets of another.1'08 The statute imposes

102 Id. at 262.

103 See 15 U.S.C. 18 (West 2000); 15 U.S.C. 18(a) (West 2000).
104 See infra Part III. See infra note 121; see also Clayton Act, ch. 323, 7, 38 Stat. 730,
731-32 (1914) (current version at 15 U.S.C. 18).
105 15 U.S.C. 18.
106 Id.
107 Id
108 Clayton Act, ch. 323, 7A, 38 Stat. 730, 731-32 (1914) (current version at 15 U.S.C.
Z18a).
2022 Killer Acquisitions 81

these requirements upon large acquisitions meeting specific criteria under

subsection (a).109 Firms whose acquisitions are subject to this act must file

a notification with the Federal Trade Commission."0 During the following

thirty-day waiting period, the Federal Trade Commission or Department

of Justice reviews the notification and may request additional information

to ensure that the acquisition will not violate antitrust laws, including

Section 7 of the Clayton Act."1 If the reviewing agency believes that a

proposed merger may substantially lessen competition or tend to create a

monopoly, and the parties cannot resolve such concerns, the agency may

attempt to prevent the merger by going to federal court." 2

b. INTERPRETATIONS OF CLAYTON 7

i. Historical Application of Clayton §§ 7 and 7A

Historically, federal courts interpreted Clayton 7 in such a way that

emphasized the statute's use of the word "may," holding that the antitrust

enforcement agencies could prohibit mergers or acquisitions that "may

have the effect of substantially lessening competition or tending to create

a monopoly," and not requiring that the agencies prove that a merger or

109 Id.
110 Id.
111 Id.
12 Mergers, FED. TRADE COMM'N, https://www.ftc.gov/tips-advice/competition-
guidance/guide-antitrust-laws/mergers (last visited Sept. 18, 2022).
82 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

acquisition definitely would create such anticompetitive effects." 3 In

United States v. Aluminum Co. ofAmerica, the United States Supreme Court

reversed the District Court's holding that a merger between two producers

of aluminum conductor would not violate Clayton 7."4 In its decision,

the Supreme Court emphasized that Clayton 7 is concerned with

"'probabilities, not certainties.""' 5 The Supreme Court held that, although

Alcoa's acquisition of Rome would add only 1.3% to Alcoa's control of

the aluminum conductor market, such an acquisition would be reasonably

likely to produce "substantial lessening of competition within the meaning

of [Clayton] 7" given the fact that the aluminum conductor market was

already highly concentrated." 6 The Supreme Court emphasized that "'if

concentration is already great, the importance of preventing even slight

increases in concentration and so preserving the possibility of eventual

deconcentration is correspondingly great."117

United States v. Aluminum Co. of America created a reasonable burden

for antitrust agencies to carry in challenging potential mergers."

13 United States v. Aluminum Co. of America, 377 U.S. 271, 272-73, 280 (1964)
(emphasis added).
14 Id. at 273, 281.
115 Id. at 280 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 323 (1962).
116 Id.
117 Id. at 279. (quoting United States v. Philadelphia National
Bank, 374 U.S. 321, 365,
n. 42 (1963).
118 Id at 272-73.
2022 Killer Acquisitions 83

Unfortunately, reliance on the case has greatly waned in recent years." 9

Since 2011, courts have cited the case only four times, with no case

relying on the standard the Supreme Court set forward.12 Instead, federal

courts have tended toward a much more rigorous burden of proof for

antitrust agencies seeking to challenge a merger."'

ii. Modern Application of Clayton §§ 7 and 7A

Modern federal courts now require the Federal Trade Commission

and Department of Justice to present extensive evidence in proving that a

merger is likely to violate Clayton 7.122 For example, in Federal Trade

Commission v. Tronox Ltd., the Federal Trade Commission was required to

meet three evidentiary burdens in making its case that a merger between

Tronox Limited and Cristal, two titanium dioxide producers, would be

violative of Clayton 7.123 First, the agency had to demonstrate the

relevant product market.' 2 4 Second, the agency had to demonstrate the

119 See infra, note 120. See DeHoog v. Anheuser-Busch InBev SA/NV, 899 F.3d 758,
764 (9th Cir. 2018); Universal Surveillance Corp. v. Checkpoint Sys., Inc., No. 5:11-CV-
1755, 2015 WL 6082122 (N.D. Ohio Sept. 30, 2015); Lenox MacLaren Surgical Corp. v.
Medtronic, Inc., 762 F.3d 1114, 1122 (10th Cir. 2014); F.T.C. v. Lab'y Corp. of Am.,
No. SACV 10-1873 AG MLGX, 2011 WL 3100372 (C.D. Cal. Feb. 22, 2011).
120 See supra note 119.
121 Fed. Trade Comm'n v. Tronox Ltd., 332 F. Supp. 3d 187, 198 (D.D.C. 2018); see also

FED. TRADE COMM'N, HORIZONTAL MERGER GUIDELINES 1 (2010),

HTTPS://W WW.FTC.GOV/SYSTEM/FILES/DOCUMENTS/PUBLICSTATEMENTS/804291/
100819HMG.PDF.
122 Tronox Ltd., 332 F. Supp. 3d at 197; see also FED. TRADE COMM'N, supranote 121, at
1.
123 Tronox Ltd., 332 F. Supp. 3d at 197.
124 Id.
84 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

relevant geographic market."' Third, the agency had to demonstrate that

26
the proposed merger "would substantially increase concentration."'

A challenging aspect of identifying the relevant product market is

that the agency had to prove that it was not defining the market too

narrowly.1 27 In arguing that the relevant product market was the market

for chloride-process titanium dioxide, the agency presented evidence

showing that consumers recognize chloride-process titanium dioxide as a

product separate from sulfate-process titanium dioxide.12 Using factors

established in Brown Shoe Co., v. United States, the agency set forth

information showing chloride-process titanium dioxide's unique

characteristics, the distinct customers that use it, the price differences

between it and sulfate-process titanium dioxide, and more. 29

In its argument that North America was the relevant geographic

market, the agency had to present extensive quantitative evidence showing

the existence of regional markets, as opposed to one global market.' In

doing so, the agency brought in an expert witness who explained the

agency's "Hypothetical Monopolist Test" results."' The Hypothetical

Monopolist Test determines that "a proposed market is sufficiently broad

125 Id.

126 Id. at 207 (emphasis added).

127 Id. at 198
.

128 Id. at 198-99.

129 Id. at 198; see also Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962).
130 Tronox Ltd., 332 F. Supp. 3d at 203.
131 Id. at 204; see also FED. TRADE COMM'N, supranote 121, at 8.
2022 Killer Acquisitions 85

if an absolute monopolist of the posited market would likely find it profit-

maximizing to impose a [small but significant] non-transitory price

increase [("SSNIP")] of at least 5%."132 The agency found that with a

SSNIP of 10%, a hypothetical monopolist in the North American

chloride-process titanium dioxide market could lose up to 15.4% of its

sales and still break even.' 33 Because this critical loss calculation of 15.4%

was less than the calculated predicted loss the agency set forward, the court

accepted the agency's argument that the North American market was the

correct geographic market.13 4

Lastly, to meet its third burden of proof, the Federal Trade

Commission had to present additional expert witness testimony and

extensive economic evidence in order to calculate and prove the market

participants' shares in the relevant product and geographic markets. 35 The

agency then determined the relevant market's concentration level by

calculating its Herfindahl-Hirschman Index ("HHI") score by squaring

the market share of each firm in a market and adding the values.1'36 Next,

1 32 ELHAUGE GERADIN, GLOBAL ANTITRUST LAW AND ECONOMICS 352 (Robert C.

Clark et al. eds., 3rd ed. 2018); see also FED. TRADE COMM'N, HORIZONTAL MERGER
GUIDELINES (2010).
133 Tronox Ltd., 332 F. Supp. 3d at 204.
134 Id. at 204-06.
135 Id. at 207-09.
136 Id. at 207; see also FED. TRADE COMM'N, HORIZONTAL MERGER GUIDELINES
(2010).
86 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

the agency presented evidence showing that if the merger were to go

through, the HHI score of the chloride-process titanium dioxide market

would be 3,046, shifting the market from "moderately concentrated" to

"highly concentrated."1 37 Finally, the agency also presented evidence

showing that post-merger strategic output withholding was likely.1 38

While the Federal Trade Commission was able to successfully

meet its evidentiary burdens and ultimately won the Tronox case, blocking

the merger between Tronox and Cristal,13 this heightened and detailed

standard has proved extremely difficult for the agencies to meet in other

cases.14 In many ways, it is as if courts now require evidence that a merger

will certainlyprove anticompetitive.141 This rigorous burden has led to fewer

merger challenges by the Department of Justice and Federal Trade

Commission.1 42 For example, in 2018, the Department of Justice lost its

case against AT&T, wherein it challenged AT&T's $108 billion vertical

merger with Time Warner, because the court held that the agency failed

to establish that the merger was likely to substantially lessen competition.1 43

137 Id. at 207.

138 Id. at 208.
139 Id. at 219-20;
140 Fed. Trade Comm'n v. Facebook, Inc., 560 F. Supp. 3d (D.D.C. 2021);
United States v. AT & T Inc., 310 F. Supp. 3d 161 (D.D.C. 2018).
141 Tronox Ltd., 332 F. Supp. 3d at 207-09.
142 UNLOCKING DIGITAL COMPETITION, supranote 52, at 91.
143
AT & T Inc., 310 F. Supp. 3d at 161. (emphasis added).
2022 Killer Acquisitions 87

This was the first vertical merger challenge the Department of Justice had

44
brought in over forty years.

As for the dominant technology platforms, the Federal Trade

Commission and Department of Justice have not proactively challenged a

single GAFA acquisition in court.1 45 This is likely because the heightened

evidentiary burden is especially difficult to meet when analyzing digital

platforms.14 Such challenges can be understood more fully in light of the

Federal Trade Commission's recent lawsuit against Facebook.

c. FEDERAL TRADE COMMISSION V. FACEBOOK

The Federal Trade Commission's recent, unsuccessful lawsuit

against Facebook reveals that unique challenges in defining the relevant

product market for and market share of digital platforms are the likely

reasons why the antitrust enforcement agencies have failed to challenge

GAFA acquisitions.1 47

144 Mark McCareins, AT&T-Time WarnerRuling a Milestonefor VerticalMergers, THE HILL,

June 14, 2018, https://thehill.com/opinion/finance/392158-att-time-warner-ruling-a-
watershed-moment-for-vertical-mergers.
145 UNLOCKING DIGITAL COMPETITION, supra note 52, at 91.
146 See infra Part III(c).
147 Facebook, Inc., 560 F. Supp. 3d.
88 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

i. Facebook' Acquisition of Instagram

Facebook acquired Instagram in 2012 for $1 billion.1 48 As of 2021,

the Facebook-Instagram merger is the only Facebook acquisition that the

Federal Trade Commission has investigated. 49 Despite its investigation,

the Federal Trade Commission did not challenge the merger. 5" In 2021,

however, the Federal Trade Commission initiated litigation against

Facebook, arguing that, by acquiring and continuing to own Instagram,

the company is illegally maintaining a monopoly in violation of Sherman

Act 2.151 The Federal Trade Commission brought this complaint under

Section 13(b) of the Federal Trade Commission Act, which "authorizes it

to seek an injunction against an entity that 'is violating' or 'is about to

violate' the antitrust laws." 5

2

In its initial complaint against Facebook, the Federal Trade

Commission alleged that, as of 2011, Facebook had become the

53
"dominant personal social networking provider in the United States."

However, as smartphones became more popular, Facebook's executives

worried that new apps would compete with Facebook for users. 5 4 Because

Facebook originated as a website and its mobile functionality was limited,

148 Id at 3-4.
149 HOUSE REPORT,supra note 2, at 11.
150 UNLOCKING DIGITAL COMPETITION, supranote 52, at 91.
151 Facebook, Inc., 560 F. Supp. 3d at 11.
152 Id.
153
Id. at 6
154 Id. at 6-7.
2022 Killer Acquisitions 89

the company feared that emerging app-based social networking services

55
would surpass Facebook.

Facebook executives were especially concerned about competition

spurred by Instagram, a "photo-editing and -sharing app designed for the

era of smartphones with built-in cameras," whose user base was growing

rapidly. 56 Because Instagram's model as a photo-sharing social network

differed from Facebook's, Facebook initially attempted to compete by

57
creating its own photo-sharing app, "Snap."1 Instagram continued

growing rapidly while Facebook was attempting to develop its own app,

and Facebook became increasingly worried that a direct competitor, like

Google, Apple, or Twitter, would acquire Instagram.1 58 Facebook

eventually shifted away from its own photo-sharing app development and

began negotiations to acquire Instagram. 5 9

Facebook successfully acquired Instagram in April of 2012 and,

less than two weeks later, began scaling back on the development of its

own app, eventually abandoning the project altogether.' Facebook's

155 Id. at 7.
156 Id.
157 Id.; First Amended Complaint Against Facebook, supra note 1, at 27.
158 Facebook, Inc., 560 F. Supp. 3d at 7; First Amended Complaint Against Facebook,
supra note 1, at 27-8.
159 Facebook, Inc., 560 F. Supp. 3d at 7; First Amended Complaint
Against Facebook,
supra note 1, at 28.
160 Facebook, Inc., 560 F. Supp. 3d at 7-8; First Amended Complaint Against Facebook,
supra note 1, at 33.
90 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

acquisition of Instagram can be categorized as a killer acquisition in that

Facebook acquired Instagram and "killed off its own internal efforts to

develop a competing product.""' The Federal Trade Commission's

complaint against Facebook specifically argued that Facebook was

maintaining a monopoly in the market for personal social networking

("PSN") services by its acquisition and continued ownership of

Instagram.6 2
Defining PSN services as "online services that enable and

are used by people to maintain personal relationships and share

experiences with friends, family, and other personal connections in a

shared space," the Federal Trade Commission stated that Facebook has a

monopoly in the relevant market because there are no other types of

internet services that are adequate substitutes for Facebook. 6 3 Instagram

previously served as a competitor in the PSN services market until

Facebook acquired it, neutralizing its threat.6 4

Despite the Federal Trade Commission's arguments, the United

States District Court for the District of Columbia dismissed the complaint

for failure to state a claim, holding that the Federal Trade Commission did

not adequately plead that Facebook possessed monopoly power in the

PSN services market." 5 Specifically, the court held that the agency's

161 OECD REPORT, supra note 15, at 6.

162 Facebook, Inc., 560 F. Supp. 3d, at 4.
163 Id. at 14.
164 Id. at 7.
165 Id. at 7, 12-13.
2022 Killer Acquisitions 91

complaint failed to show that Facebook holds market power in the PSN

services market."' The court's opinion stated that the agency's evidence

was "too conclusory" because they did not provide an "estimated actual

figure or range for Facebook's market share" but simply stated that

Facebook's market share had been in excess of 60% of the PSN services

market since 2011.167 The court went on to explain the existing difficulties

in measuring Facebook's market power.1 68 Its market power cannot be

measured by revenue, because revenues earned by PSN services are earned

in the market for advertising, which is a separate market." 9 Facebook's

market power also cannot be measured by its share of the total number of

users of PSN services because this figure would not account for users who

are part of multiple PSN services.1 70 Lastly, the court stated that

Facebook's market share cannot be measured by its share of the total time

that users spend on PSN services because this metric would not account

for features offered by Facebook or Instagram that could be characterized

as "non-PSN services," such as watching an online video.' 7

'

166
1d. at 4
167
1d. at 18
168 Id. at 19.
169 Id.
170 Id.
171 Id.
92 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

The dismissal of the Federal Trade Commission's complaint,

along with the court's analysis of the difficulties in measuring Facebook's

market share, are very likely the reasons why the agency did not challenge

the merger in 2012. As discussed previously, digital platforms are multi-

sided markets where customers are not charged monetary fees, and

revenues are earned in a separate advertising market.1 72 Because customers

"pay" for digital platform services in the form of data, it can be extremely

difficult to measure a particular platform's market share.1 73 Additionally,

as discussed previously, in reviewing merger challenges under Clayton 7,

courts have become more demanding, requiring the Federal Trade

Commission and Department of Justice to present detailed evidence of

the relevant market, the merging firms' market shares, and the likely

market concentration and anticompetitive effects that would result from

the merger.1 74 In the relevant case, the Federal Trade Commission had the

benefit of being able to access almost ten years of post-merger activity and

statistics in making its arguments, yet it still failed to meet the court's

evidentiary requirements.17' Had the agency attempted to challenge

Facebook's acquisition of Instagram in 2012, it is very likely that it would

172 Kill Zone, supra note 9, at 2; see also IMF Report, supranote 36, at 25.
173 HOUSE REPORT, supra note 2, at 51; Facebook, Inc., 560 F. Supp. 3d at 13.
174 Tronox Ltd., 332 F. Supp. 3d at 198-209.
175 Facebook, Inc., 560 F. Supp. 3d at 1.
2022 Killer Acquisitions 93

have had an even harder time meeting its burden of proof because it would

have had the additional burden ofpredicting the outcomes of the merger.

ii. Facebook's Acquisition of WhatsApp

Facebook acquired WhatsApp in 2014 for $19 billion.1 76 Once

again, the Federal Trade Commission and Department of Justice did not

challenge the merger, but in its 2021 complaint against Facebook, the

Federal Trade Commission also accused the company of monopoly

maintenance by its acquisition and continued ownership of WhatsApp.1'77

The agency's attack on the WhatsApp merger differed from the

Instagram merger in that WhatsApp was not a competitor in the PSN

services market.1'78 Instead, the agency argued that Facebook feared

WhatsApp, which was part of the mobile messaging services market,

might become a competitor in the PSN services market.1 79 Like Instagram,

WhatsApp was an app-based platform gaining popularity with the rise of

smartphones.' 80 In an initial attempt to compete, Facebook released its

Facebook Messenger app, hoping that it would slow the growth of

WhatsApp, preventing WhatsApp from expanding into the PSN services

176 Facebook, Inc., 560 F. Supp. 3d at 8.

177 UNLOCKING DIGITAL COMPETITION, supra note 52, at 91; Facebook, Inc., 560 F.
Supp. 3d at 9.
178 Facebook, Inc., 560 F. Supp. 3d at 8.
179 Id.

180 Id.
94 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

market.' 8 ' But to Facebook's dismay, WhatsApp continued growing,

reaching 450 million active users by 2014.182 Driven by fear of

competition, Facebook began attempts to neutralize the threat through an

acquisition.1 83 After failed negotiations in 2012, Facebook successfully

acquired WhatsApp in 2014.184 Facebook's acquisition of WhatsApp can

be categorized as an acquisition of a nascent competitive threat in that

Facebook acquired WhatsApp to neutralize the potential that WhatsApp

might develop into a PSN services competitor in the future.1 85

The Federal Trade Commission argued that, since the acquisition,

Facebook had maintained its monopoly in the PSN services market by

keeping WhatsApp "'cabined to providing mobile messaging services

rather than allowing' it to grow into a standalone PSN service."186 As

mentioned previously, the Federal Trade Commission's complaint was

ultimately dismissed for failure to state a claim.1 87 The District Court's

dismissal of the complaint cited the same reasoning for dismissing both

the Instagram and WhatsApp merger arguments: the Federal Trade

Commission failed to show that Facebook holds power in the PSN

services market and the agency failed to present an actual figure or range

181 Id
182 Id
183 Id
184 Id.; HOUSE REPORT, supra note 2, at 157.
185 OECD REPORT, supra note 15, at 6.
186 Facebook, Inc., 560 F. Supp. 3d at 8.
187 Id. at 12.
2022 Killer Acquisitions 95

for Facebook's market share.88189 Given the court's insistence on

quantitative data and hard evidence of market power, 90 it is highly unlikely

that, in 2014, the court would not have accepted an argument that the

merger was anticompetitive because WhatsApp could and might someday

enter the PSN services market. This dilemma further enables dominant

technology platforms in their acquisitions of nascent competitive threats

because the anticompetitive effects are very difficult to prove under the

current interpretation of Clayton 7 and Sherman 2.1

Because of the challenges of proving the relevant product market and

market share of digital platforms, especially those that are nascent

competitors, the antitrust enforcement agencies have been extremely

hesitant in challenging GAFA acquisitions. 9 2 Even in its retroactive

challenges of acquisitions, the Federal Trade Commission has been

unsuccessful. 9 3 Courts' interpretations of the relevant laws must be

refined if such anticompetitive acquisitions are to be prevented.

188 Id. at 12-13.

189 Id. at 4.
190 Id. at 12-13.
191 See infra Part IV.
192 See supra Part III.
193 Facebook, Inc., 560 F. Supp. 3d.
96 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

IV. RESTORATION IN THE DIGITAL ECONOMY

THROUGH LEGISLATIVE CHANGE

Recognition of the need for change in antitrust enforcement has

been growing rapidly over the last two years. 9 4 Both Republican and

Democratic politicians have acknowledged the need for legislation that

reinforces anticompetitive presumptions on certain behaviors by

dominant platforms and lowers evidentiary burdens for antitrust agencies

in court.1 95 In June of 2021, as sponsored by Congressman Hakeem

Jeffries, the "Platform Competition and Opportunity Act of 2021" was

introduced before the House of Representatives."6 Later that month, the

Committee on the Judiciary voted to issue a report to the full chamber.1 97

More recently, in November of 2021, Senator Amy Klobuchar introduced

a companion bill before the Senate.1 98 This paper will analyze Senator

Klobuchar's companion bill in detail, though the language of the two bills

is nearly identical.

194 HOUSE REPORT, supra note 2, at 376-403; Cecilia Kang, Lawmakers, Taking Aim at Big
Tech, Push Sweeping OverhaulofAntitrust, N.Y. TIMES, June 29, 2021.
195 HOUSE REPORT, supra note 2, at 376-403; see also BUCK REPORT, supranote 25, at 5.
196 H.R. 3826, 117th Cong. (2021).
197 Platform Competition and Opportunity Act of 2021, H.R. 3826, 117th Cong. (2021),
https://www.congress.gov/bill/ 117th-congres s/house-bill/3826/text.
198 Klobuchar, Cotton Introduce BipartisanLegislation to Protect Competition and Consumer Choice
Online, AMY KLOBUCHAR (Nov. 5, 2021),
https://www.klobuchar.senate.gov/public/index.cfm/2021/11/klobuchar-cotton-
introduce-bipartisan-legislation-to-protect-competition-and-consumer-choice-online.
20221 Killer Acquisitions 97

a. THE PLATFORM COMPETITION AND OPPORTUNITY ACT OF

2021

The Platform Competition and Opportunity Act of 2021 ("the

Platform Act") seeks to "promote competition and economic opportunity

in digital markets by establishing that certain acquisitions by dominant

online platforms are unlawful."" This legislation shifts the burden of

proof from the antitrust enforcement agencies to the "covered platform"

0
seeking to acquire the stock or assets of another.2 A "covered platform"

is defined as an online platform that has met certain criteria pertaining to

its number of monthly active users and market capitalization as well as

being "a critical trading partner for the sale or provision of any service

offered on or directly related to the platform." 20 ' Additionally, a "covered

199 S. 3197, 117th Cong. (2021).

200 Id.
201 Id. (stating "The term 'covered platform' means an online platform (1) that has been
designated as a 'covered platform' under section 4(a); or (2) that (A) at any point during
the 12 months preceding a designation under section 4(a) or at any point during the 12
months preceding the filing of a complaint for an alleged violation of this Act (i) has at
least 50,000,000 United States-based monthly active users on the online platform
operator; or (ii) has at least 100,000 United States-based monthly active business users
on the online platform; (B) as of the date of enactment of this Act, was owned or
controlled by a person with United States net annual sales of $600,000,000,000 in the
prior calendar year or with a market capitalization of greater than $600,000,000,000, as
measured by the simple average of the closing price per share of the common stock
issued by the person for the trading days in the 180-day period ending on the date of
enactment of this Act; and (C) is a critical trading partner for the sale or provision of
any product or service offered on or directly related to the online platform.").
98 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

platform operator" is defined as a person that "owns or controls a covered

platform." 20 2

Under the Platform Act, it would be deemed unlawful for a covered

platform operator to acquire the stock or assets of another person engaged

in commerce, either directly or indirectly, unless the covered platform could

demonstrate by clear and convincing evidence that (1) the transaction

would be exempt under Clayton 7A(c), 2 3 (2) the acquired stock or assets

are valued at less than $50,000,000, or (3) the acquired assets or stock

would not: (a) "compete with the covered platform or covered platform

operator for the sale or provision of any product or service," (b)

"constitute nascent or potential competition to the covered platform or

covered platform operator for the sale or provision of any product or

service," (c) "enhance or increase the covered platform's or covered

platform operator's market position with respect to the sale or provision

of any product or service," and (d) "enhance or increase the covered

platform's or covered platform operator's ability to maintain its market

position with respect to the sale or provision of any product or service

offered on or directly related to the covered platform. "204

202 Id.
203 15 U.S.C. 18(a).
204 S. 3197, 117th Cong. (2021).
2022 Killer Acquisitions 99

The legislation also specifies that competition for the sale of any

product or service includes competition for a user's attention. 2 05

Additionally, the legislation clarifies that an acquisition resulting in access

to additional data, without more, may enhance or increase the market

position of a covered platform or the covered platform's ability to maintain

6
its market position. 2

b. ANALYSIS OF THE PLATFORM ACT

This legislation would shift the burden of proof to the dominant

technology platforms by changing the default presumption. 207 Now,

instead of presuming an acquisition to be legal and requiring the antitrust

enforcement agencies to prove otherwise, certain acquisitions by covered

platforms would be presumed illegal, unless the plaform could show

otherwise. 20 Covered platforms engaging in acquisitions would be

required to show that the companies they acquire are not direct

competitors, nascent competitors, or potential competitors and that their

acquisitions would not facilitate the acquirer's maintenance of or increase

in market power. 2 ' Additionally, the standard of proof for the covered

205 Id.
206 Id.
207 Id.; see also 15 U.S.C. 18.
208 S. 3197; 15 U.S.C. 18(a).
209 S. 3197.
100 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

platforms would be clear and convincing evidence, a rigorous standard

requiring proof that "a particular fact is substantially more likely than not

210
to be true.

In court, the antitrust enforcement agencies would no longer have to

present extensive evidence of the dominant technology platform's

relevant product market, geographic market, and market concentration.2

'
Thus, the agencies would no longer be tied to the use of the Hypothetical

Monopolist Test, HHI scores, and other economic data measures."'

Instead, a merger resulting in any increase in market power to a dominant

technology platform would be deemed illegal.2 3

Because the platforms engaging in acquisitions have easier access to

their own plans and financial data, they are more equipped to present

necessary evidence in defense of their acquisition plans, unlike the

current system whereby the antitrust enforcement agencies are required to

present the bulk of the necessary evidence.21 4 This would greatly simplify

the process of merger review, allowing the antitrust enforcement agencies

to adequately review merger plans and to challenge mergers without fear

of imminent failure in court.

210 Id; Evidentary Standards and Burdens of Proofin Legal Proceedings,JUSTIA,

https://www.justia.com/trials-litigation/lawsuits-and-the-court-process /evidentiary-
standards-and-burdens-of-proof/ (last visited Dec. 5, 2021).
211 S. 3197.
212
See supra Part III.
213 S. 3197.
214 See supra Part III.
2022 Killer Acquisitions 101

The proposal also addresses the issues associated with determining the

market share of a multi-sided digital platform. Digital platforms' main

source of "currency" on the user side, rather than money, is the access to

data it gains through reaching more users. 215 By expanding the concept of

market power to include user attention and access to data, courts will be

able to more accurately determine the extent to which a merger will

increase a dominant technology platform's power.2 6

This legislation could also help address the competitive harms

previously mentioned-the decline in innovation and inadequate privacy

protections. First, by prohibiting covered platforms from acquiring new

start-ups that pose actual or potential competitive threats, start-up

companies will be given greater opportunities for their ideas to be realized.

Preventing these acquisitions will likely help to undo the "kill zone" that

has been created by GAFA, incentivizing venture capital investment in

technology start-ups. 217 With increased funding for start-up companies

and more opportunity to grow without death by acquisition, start-ups will

have greater potential to reach scale and become viable competitors in the

technology market.218

215 KillZone, supra note 9, at 2; see also IMF Report, supra note 36, at 25.
216 S. 3197, 117th Cong. 2 (2021).
217 Ki/ Zone, supra note 9, at 3.
218 Id.
102 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

This legislation could also incentivize digital platforms to offer greater

privacy protections because the Platform Act treats data and user attention

like currency, in a sense, dominant platforms will be mostly prohibited

from acquiring smaller firms in attempts to gain greater access to data. 219

Additionally, as start-up firms survive and grow without being acquired

and subsequently killed off or neutralized, they will provide competitive

pressure that will likely spur greater privacy protections.2 2 o With increased

competitive pressure, dominant platforms will be required to hear and

respond to customer demand for increased privacy protections, no longer

able to "erode consumer privacy without prompting a response from the

market." 22
'

Despite its potential to benefit the digital economy, this legislation

sparks concerns as well. First, the Platform Act excludes acquisitions

valued at less than $50 million from its coverage.222 According to the

House Judiciary Report, GAFA has been actively engaging in

acquisitions valued at less than $50 million, in addition to those valued in

the billions. 223 By excusing these smaller, yet significant, acquisitions, the

Platform Act could fail to adequately prevent killer acquisitions and

219 S. 3197, 117th Cong. 2 (2021).

220 HOUSE REPORT, supra note 2, at 51; see also UNLOCKING DIGITAL COMPETITION
supranote 52, at 50.
221 HOUSE REPORT, supra note 2, at 51.
222 S. 3197, 117th Cong. 2 (2021).
223 HOUSE REPORT, supra note 2, at 406-450.
2022 Killer Acquisitions 103

acquisitions of nascent competitive threats. Instead, this type of

legislation could cause dominant technology platforms to become even

more defensive, incentivizing them to more rigorously scout out and

acquire start-ups while they are small, successfully avoiding the need to

comply with the Platform Act and simultaneously undermining its goals.

As previously mentioned, GAFA's immense access to data has enabled it

to identify and acquire nascent competitors very early in their

development.22 4 This legislation could simply reinforce such behavior,

ultimately making it impossible for start-up companies to enter the

market without an immediate takeover.

c. THE PLATFORM ACT AS APPLIED TO FACEBOOK'S

ACQUISITIONS OF INSTAGRAM AND WHATSAPP

In addition, the Platform Act may be too narrowly tailored to GAFA

as it stands today. The Platform Act appears to be focused solely on

preventing the largest technology platforms from gaining more power, such

that it fails to adequately address the fact that Google, Apple, Facebook,

and Amazon also obtained the power they already have through these

anticompetitive acquisitions.2 This concern may be understood more

clearly by applying the Platform Act to the previously discussed Facebook

224 Id. at 44.

225 S. 3197, 117th Cong. 3 (2021).
104 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

acquisitions. While Facebook would certainly qualify as "covered

platform" today, it is not clear that the Platform Act would have prevented

the Instagram and WhatsApp acquisitions, had it been in place at the

time."

i. Facebook's Acquisition of Instagram

If the Platform Act had been law at the time of Facebook's

acquisition of Instagram, the merger would likely still have been allowed

because Facebook would not have qualified as a covered platform at the

time.22' By the end of 2011, Facebook had 179 million actively monthly

users in North America. 2 2 However, it did not yet have a market

capitalization of $600 billion, nor did it have $600 billion of net annual

sales.229 Despite these numerical shortcomings, every other aspect of the

226HOUsE REPORT, supra note 2, at 92; Number ofMonthy Active Facebook Users in United
States and Canadaas of ThirdQuarterof 2021, STATISTICA (July 28,
2022),https: //www.statista.com/statistics/247614/number-of-monthly-active-
facebook-users-worldwide/; Salvador Rodriguez, Facebook Closes Above $1 Trillion Market
Capfor the FirstTime, CNBC (June 28, 2021),
https://www.cnbc.com/2021/06/28/facebook-hits-trillion-dollar-market-cap-for-first-
time.html.
Facebook would qualify as a covered platform in 2021 because it has over 50 million
U.S.-based monthly active users, its market capitalization is in excess of $600 billion,
and it is a critical trading partner for the sale or provision of social media services.
227 S. 3197, 117th Cong. (2021).
228 Number ofMonthy Active Facebook Users in United States and Canadaas of Third Quarterof
2021, STATISTICA (July 28, 2022), https://www.statista.com/statistics/247614/number-
of-monthly-active-facebook-us ers-worldwide/.
While the exact number of monthly active Facebook users specifically from America in
2011 is not available, it is extremely likely that with 179 million active monthly users in
the United States and Canada, at least 50 million were based in America.
229Susanne Craig & Andrew Ross Sorkin, Goldman Offering Clients a Chance to Invest in
Facebook, N.Y. TIMES (Jan 2, 2011),
https://dealbook.nytimes.com/2011/01/02/goldman-invests-in-facebook-at-50-
billion-valuation/; Facebook's Revenue and Net Incomefrom 2007 to 2020, STATISTICAJuly
2022 Killer Acquisitions 105

acquisition would have fallen under the control of the Platform Act:

Facebook would certainly have been deemed a critical trading partner for

the provision of social media services; 2 30 the acquisition did not qualify for

the enumerated exceptions in Clayton 7A(c) because Facebook was

required to file a notification of the transaction; 2 31 and Instagram was

purchased for $1 billion, which surpassed the Platform Act's exception for

acquired stock or assets worth less than $50 million. 232 It also is likely that

Facebook would not have been able to meet the Platform Act's burden of

proof, showing by clear and convincing evidence that Instagram was not

a competitor for the provision of social media services. Competition, as

defined by the Platform Act, includes competition for user attention. 2 33

Even though Facebook and Instagram's models were different-one

being web-based and the other being a photo-sharing app-they most

certainly competed for user attention in general social media services. 2 34

Facebook also would likely have had a very difficult time arguing that the

27, 2022), https://www.statista.com/statistics/277229/facebooks-annual-revenue-and-

net-income/Tomio Geron, Facebook's 5 Billion IPO Filing: $3.7 Billion in 2011 Revenue,
FORBES (Feb 1, 2012),
https://www.forbes.com/sites/tomiogeron/2012/02/01/facebooks-5-billion-ipo-
filing-3-7-billion-in-2011-revenue/?sh-455473d331 a8.
230 HOUSE REPORT, supra note 2, at 92.
231 Fed. Trade Comm'n v. Facebook, Inc., 560 F. Supp. 3d 1, 31 (D.D.C. 2021).
232
Id. at 7
.

233 S. 3197, 117th Cong. 2 (2021).

234 Facebook, Inc., 560 F. Supp. 3d at 7.
106 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

acquisition of Instagram would not enhance its market position. Because

access to data alone can enhance a platform's market position and

Instagram had 100 million users by the time of the transaction's closing, 235

Facebook most certainly gained access to data through the acquisition.

Facebook's acquisition of Instagram allowed it to gain immense

market power while simultaneously avoiding competition. 236 Additionally,

Facebook likely would not have been able to meet the Platform Act's

required showings. Despite these facts, under the Platform Act,

Facebook's acquisition of Instagram would likely stillhave been successful,

because Facebook did not qualify as a covered platform at the time.2 37

ii. Facebook s Acquisition of WhatsApp

The results of Facebook's acquisition of WhatsApp would have

been very similar to those of its acquisition of Instagram. By the end of

2014, Facebook had 208 million active monthly users in North America,

almost certainly surpassing the 50 million United States-based user

requirement of the Platform Act. 2 38 However, Facebook still did not have

a market capitalization of $600 billion at this time, nor did it have net

235 S. 3197, 117th Cong. 2 (2021); HOUSE REPORT, supra note 2, at 155.
236 HOUSE REPORT, supra note 2, at 137.
237S. 3197, 117th Cong. 3 (2021).
238Number ofMonthy Active Facebook Users in United States and Canadaas of ThirdQuarterof
2021, STATISTICA (July 28, 2022),
https://www.statista.com/statistics/247614/number-of-monthly-active-facebook-
users-worldwide/.
2022 Killer Acquisitions 107

annual sales of $600 billion. 29 Despite these shortcomings, every other

aspect of the acquisition would have fallen under the control of the

Platform Act.2 4 Once again, Facebook's acquisition of WhatsApp did not

qualify for an exception under Clayton 7A(c) because Facebook was

required to file a notification statement for the transaction.2 4' Facebook

was certainly a critical trading partner for the provision of social media

services.2 42 And WhatsApp was purchased for $19 billion, greatly

surpassing the exception in the Platform Act for assets or stock valued

below $50 million.2 43

Again, were Facebook required to comply with the Platform Act's

requirements, it likely would not have been successful. Facebook

potentially could have argued that WhatsApp did not compete with it for

the provision of services, because WhatsApp focused on providing

messaging services. 2 44 However, a court would likely find that WhatsApp

competed with Facebook's Messenger app for user attention. 2 4

239 Facebook's Revenue and Net Incomefrom 2007 to 2020, STATISTICA (July 27, 2022),
https://www.statista.com/statistics/277229/facebooks-annual-revenue-and-net-
income/; Market Cap Histoy ofMeta (Facebook)from 2012 to 2020, COMPANIES MARKET
CAP (July 5, 2022), 7, 2021).https://companiesmarketcap.com/facebook/marketcap/.
240 S. 3197, 117th Cong. 3 (2021).
241 Facebook, Inc., 560 F. Supp. 3d at 8.
242 HOUSE REPORT, supra note 2, at 92.
243 Facebook, Inc., 560 F. Supp. 3d at 8.
244 Id.
245 S. 3197, 117th Cong. 2 (2021).
108 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

Additionally, Facebook would have had a difficult time arguing that

WhatsApp was not a potential competitor, because WhatsApp's mobile-

messaging app was gaining popularity so quickly, a likely next step would

have been for WhatsApp to venture into social media services. 2 46

Lastly, similar to Facebook's acquisition of Instagram, Facebook

's acquisition of WhatsApp undoubtedly allowed it greater access to

data.247 By the end of 2013, WhatsApp had 400 million monthly active

users, providing Facebook with data that enhanced its market position. 2 4

Even though Facebook would likely have failed to prove that this

acquisition would not be anticompetitive, the transaction would have been

approved because Facebook did not qualify as a "covered platform" at the

time.24

It is important to note that the Platform Act was drafted with

the 2021 digital market's dominant platforms in mind.5 0 If the Platform

Act had been drafted in 2012, it likely would not have required such a high

market capitalization and net annual sales rate in its definition of "covered

246 Facebook, Inc., 560 F. Supp. 3d at 8.

247 HOUSE REPORT, supra note 2, at 92, 136.
248 Number ofMonty Active WhatsApp Users Worldwidefrom April 2013 to March 2020,
STATISTICA, https://www.statista.com/statistics /260819/number-of-monthly-active-
whatsapp-users/ (last visited Dec. 7, 2021).
249 S. 3197, 117th Cong. (2021).
250 Klobuchar, Cotton Introduce BipartisanLegislation to Protect Competition and Consumer Choice
Online, AMY KLOBUCHAR (Nov. 5, 2021),
https://www.klobuchar.senate.gov/public/index.cfm/2021/11/klobuchar-cotton-
introduce-bipartisan-legislation-to-protect-competition-and-consumer-choice-online.
2022 Killer Acquisitions 109

platform." Nevertheless, the boundaries of the Platform Act raise

concerns as to its ultimate goals. If the goal of the act is simply to prevent

GAFA from gaining more power through the use of anticompetitive

acquisitions, it will likely succeed. However, if the goal of the Platform Act

is to prevent future dominant platforms from rising to the level of GAFA

through the use of killer acquisitions and acquisitions of nascent

competitive threats, it is unclear whether the legislation will accomplish

this goal.

As previously discussed, given the current conditions of the digital

market, it would be extremely difficult for a new entrant to gain scale in

the digital economy."' Network effects, switching costs, data

accumulation, and economies of scale have made it so that new entrants

cannot compete with GAFA.2 2 However, if laws like the Platform Act

which limit GAFA's ability to acquire new entrants-are enacted, it could

create room in the digital market for new platforms to enter and grow. If

new entrants successfully develop into competitive forces in the market,

nothing will prevent them from using killer acquisitions and acquisitions

of nascent competitive threats to gain scale.2" Only once they become big

251 See supra Part II.

252 HOUSE REPORT, supra note 2, at 40-46; IMF Report, supra note 36, at 24.
253 See supra note 249.
110 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

enough and powerful enough to qualify as "covered platforms" will their

use of anticompetitive acquisitions be limited.25 4 Thus, it seems that if new

legislation is to prevent future dominant platforms from gaining power

through the use of anticompetitive acquisitions, the definition of "covered

platform" should be expanded to include the "Facebooks" of the early

2010s.

d. ADDITIONAL POTENTIAL CRITICISMS OF THE PLATFORM ACT

Many economists have expressed concern about the idea of new

antitrust legislation that would establish a "bright-line" presumption

against acquisitions by dominant platforms.2 5 Republican representative

Ken Buck, in his response report to the House Judiciary Committee's

findings, The Third Way, stated that "Congress must be cautious not to

establish a new bright line presumption that Big Tech should be banned

from making any and all future acquisitions."256 Representative Buck

explains that such bright-line rules could harm start-up companies because

many rely on developing a successful product and then subsequently

selling the product to a larger company. 257 Representative Buck also opines

that a bright-line presumption would further discourage venture capital

investment because without the possibility of acquisition by a larger

254 Id.
255 BUCK REPORT, supra note 24, at 15; see also Kil Zone, supra note 9, at 32-33.
256 BUCK REPORT, supra note 24, at 15.
257 Id
2022 Killer Acquisitions 111

company upon the development of a successful project, many investors

would be disincentivized to invest. 25 s While the Platform Act would not

ban all acquisitions by dominant technology platforms, it is clear that a

tension exists between preventing harmful acquisitions and encouraging

acquisitions that introduce new technology into the market.259 Other

economists have expressed similar concerns and offered opinions as to

how this delicate line might be toed.

In their article "Kill Zone, "Raghuram G. Rajan, Luigi Zingales, and

Sai Krishna Kamepalli argue that simply preventing mergers by dominant

technology platforms will leave users split between multiple platforms.2 o

As discussed in Part II, mergers by dominant technology platforms

"immediately transmit superior technology to everybody." 26 ' Dominant

platforms make the technology of a newly acquired company compatible

with their pre-existing technology, thereby giving all the dominant

platform's users immediate access to the new technology. 2 2

While this

process can be harmful in that it eliminates the incentive for early app

developers to adopt apps, it is beneficial in that it creates consumer

258 Id
259 Supra note 249.
260 Ki/l Zone, supranote 9, at 32.
261 Id. at 3-4, 35.
262 Id. at 3-4.
112 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

welfare, automatically giving consumers access to new technology which

becomes interconnected with their existing profiles on the dominant

platforms.2 "3 If dominant firms are no longer able to acquire new entrants,

an increase in technology platform providers will likely result in consumers

4
being split between multiple platforms.2 For example, because of

interoperability between Facebook and Instagram, users can share a photo

on Instagram and Facebook simultaneously. If platforms become divided,

such efficiencies will likely decline. 265

The House Judiciary Committee also expressed concern that digital

markets have become so prone to tipping that they are "no longer

contestable by new entrants."2 " Even with new legislation limiting further

acquisitions by dominant technology platforms, it is likely that such

platforms have become so powerful, new entrants will still not be able to

adequately compete.2 67 Because of network effects and switching costs,

consumers will be hesitant to switch to a newer platform and entrants will

struggle to be successful in the digital market.2 68

Both the authors of "Kill Zone" and the members of the House

Judiciary Committee recommend that an interoperability standard be

263 Id. at 32-35.

264 Id.
265 Id.
266 HOUSE REPORT, supra note 2, at 384.
267 Id
268 Id; see also Kit! Zone, supra note 9, at 32-35.
2022 Killer Acquisitions 113

adopted to address these issues.2 " They argue that an interoperability

requirement would "allow competing social networking platforms to

interconnect with dominant firms to ensure that users can communicate

across services" and would break down the power of network effects "by

allowing new entrants to take advantage of existing network effects" at the

market level, rather than the company level. 27 The authors of "Kill Zone"

believe that such a requirement would also restore the "proper incentive

to innovate." 27' Because all platforms and consumers would have access

to the "externalities associated with the whole network...the better

product [would] always prevail." 2 72 The power of switching costs on

consumers would also decrease. 273 Consumers would be free to adopt new

platforms, while simultaneously maintaining their pre-existing networks.2 74

Thus, to adequately address the competitive issues created by

underdeterrence of anticompetitive acquisitions, new legislation must

prevent further acquisitions by dominant platforms from taking place,

while simultaneously reinvigorating new entry into the digital economy.2 75

It is likely that the inclusion of interoperability requirements in the

269 HOUSE REPORT, supra note 2, at 384-86; Kill Zone, supra note 9, at 31-35.
270 HOUSE REPORT, supra note 2, at 385.
271 K//l Zone, supranote 9, at 32.
272 Id
273 Id
274 Id
275 HOUSE REPORT, supra note 2, at 384.
114 TRANSACTIONS: THE TENNESSEE JOURNAL OF BUSINESS LAW [Vol. 24

Platform Act, or the establishment of such standards through additional

legislation, would give the digital economy the boost it needs, increasing

incentives to innovate, leading to better competitive balance.

V. CONCLUSION

Merger law, as currently construed by federal courts, fails to

prevent dominant technology platforms from engaging in killer

acquisitions and acquisitions of nascent competitive threats. The burden

of proof placed on the Department of Justice and Federal Trade

Commission is too demanding and often unattainable, creating an

environment where the agencies are unlikely or unable to challenge

acquisitions by GAFA.

Google, Apple, Facebook, and Amazon have used these

anticompetitive acquisitions to gain power, neutralize competitive threats,

and drive new entrants from the market. With less competition in the

digital market, incentives to innovate have declined, enabling GAFA to

continually gain power through the abuse of consumer data privacy. If

merger law does not address these issues, GAFA will continue gaining

power, decreasing competition, and harming both entrepreneurs and

consumers.

Merger law must be reformed so that it can both limit the

dominant technology platforms' uses of anticompetitive acquisitions and

address the competitive harms created by such acquisitions.