15 small tech acquisitions that might catch the eye of the FTC
The government is looking into all the deals Alphabet, Amazon, Apple, Facebook and Microsoft have made in the last decade. These lesser-known deals may stand out.
Facebook's blockbuster acquisitions of Instagram and WhatsApp were reviewed and approved by regulators. But when it hoovered up Beluga? Not so much.
This week, the Federal Trade Commission asked Alphabet, Amazon, Apple, Facebook and Microsoft to fork over information on all of the companies they gobbled up over the last decade in an effort to better understand antitrust enforcement in the United States. Though the request is being framed as a research effort, FTC chair Joseph Simons said, "All of our options are on the table," implying regulatory action could result from the study.
Now, the question is: Which deals are most likely to find themselves in the FTC's crosshairs?
According to former FTC chair William Kovacic, the FTC will be looking for two possible scenarios: "Whether the [acquired] firm had an idea that suggested that, left to their own devices, it would have flourished independently and whether or not the acquirer proceeded to use the IP and develop it. The other scenario is where the firm had a promising idea, and it just simply disappears after the acquisition."
In both cases, he said, the FTC will be looking to see if the company would have turned into a competitive alternative.
The FTC could also look specifically at whether any such shift in the competitive landscape had an effect on consumer welfare, said Nikolas Guggenberger, a clinical lecturer in law, a research scholar in law, and the executive director of the Information Society Project at Yale Law School. "If they detect that either prices went up, or quality went down or innovation slowed down because of the acquisition, that is what they should be looking for," he said.
Anti-monopoly advocates have, in the past, raised questions about giant purchases, like Google snapping up Waze. But the FTC made clear this week it's equally interested in the hundreds of the smaller deals it never got a chance to review. That is, acquisitions that weren't reported to the FTC at the time, because they fell below the agency's oversight threshold. (That threshold is currently $90 million, but will soon increase to $94 million).
With that in mind, armed with data from PitchBook, we combed through the history books and hundreds of lesser-known deals from the past decade and found some that might raise regulator eyebrows in retrospect.
Acquired by Alphabet
Cost: $50 million
What it did: Social search engine
Acquired in 2010 and discontinued just a year later, Aardvark let users ask questions and receive answers from topic experts through live chat or email. But after buying the service, Google did very little with it, shifting most of the startup's employees to work on its now-defunct Google+ social network. Still, the service proved innovative at the time and paved the way for future ventures, including Quora and Superpod, the latter of which Google also purchased in January 2019.
Cost: $25 million
What it did: A Microsoft Office collaboration service
Founded in 2007 by Microsoft veterans Shan Sinha and Alex DeNeui, DocVerse let users download a plug-in for Microsoft Office applications to write and edit documents together in real-time. Shuttered just one year later, Google transitioned the DocVerse team to focus on building Google Cloud Connect for Microsoft Office, a free plug-in that offered similar features for Office users. Although Google Cloud Connect was also discontinued in 2013, many of Cloud Connect's features were folded into Google Drive.
Cost: $60 million
What it did: Social search engine
Similar to Aardvark in its mission, Superpod matched users' questions with answers from experts across a wide array of topics. Upon acquisition, Superpod told its users it was promptly shutting down, and its team would move over to work on an unspecified "larger project" at Google, with speculation suggesting the team could be working on improving Google Assistant.
Acquired by Amazon
Acquired: September 2010
What it did: Online indie music store
In June 2014, Amazon broke into the music-streaming wars with its own Amazon Music Service. Three months later, it acquired a popular indie competitor, Amie Street, and began redirecting its traffic back to Amazon. The online retail giant even offered customers $5 coupons to buy music from its service. Amie Street's business model, by contrast, had used demand-based pricing. Songs started off free to download, but increased in cost the more people downloaded them.
Acquired: May 2019
What it did: Ad server business
Amazon acquired Sizmek to compete with Google in the advertising space. But concerns about how this purchase might look to regulators were there from the very start. In an article in AdAge announcing the news, one expert suggested that regulators might not look fondly at the tech giant profiting from the very ads that direct shoppers back to Amazon. "Usually, you pay to get traffic to your site, but Amazon is going to be making money to drive traffic to its store — it's just so Amazon-y," Jon Bond, chairman of the location data company SITO Mobile, told AdAge at the time.
Acquired by Apple
Cost: $32 million
What it did: AR development platform
Metaio immediately ceased offering products when Apple acquired it. Apple unveiled ARKit, its own AR development platform in 2017, and Android unveiled its competing platform later in the year. Given the time it takes to develop custom AR apps and experiences on top of any platform, developers may be less likely to build for multiple standards, leaving users choosing iOS devices that have more-engaging AR apps than elsewhere.
What it did: Digital health records
Apple purchased Gliimpse and promptly shut it down. The platform, which allowed users to track and manage their own healthcare data, and securely share it with whoever they wanted, will likely become more integral into Apple's future plans as it pushes further into health. It recently partnered with the VA to vets's health records on their iPhones — who is going to leave Apple if it means giving up easy access to their health records?
Cost: $30 million
What it did: Like Pandora for podcast content
Apple bought the company for its Swell app, which it killed, likely porting its technology into its own Podcasts app. The company is reportedly looking to cash in on the podcast boom by producing its own podcasts, much like it's done with shows on Apple TV+. Original content lock-in, and making it easier to find similar content on Apple devices over any others, might be of interest to the FTC.
What it did: City transit guides
HopStop used to produce one of the most popular apps for navigating cities on Android, iOS and Windows devices, with transit info on hundreds of cities. Apple dropped Google Maps on iOS for its own offering in 2012. It purchased HopStop in July 2013, killed Windows support a few days later, dropped Android in September, and shuttered the app outright by 2015. It integrated much of the data into Apple Maps in iOS 9, released that same year. Apple also snapped up other map-related companies, including Embark, Poly9, MapSense, Locationary, Indoor.io and WiFiSLAM.
Cost: $28.23 million
What it did: Facial-recognition software
Polar Rose made plugins that allowed users to automatically find and detect faces in photo albums, for sources on the web like Flickr and Facebook. It shut down its service two weeks before it was confirmed that Apple purchased the company. Apple's Photos app on iOS and Mac devices can now tag faces in a similar way.
Cost: $75 million
What it does/did: Voice interface platform
Apple's $200 million acquisition of Siri might be well-known, but the company has bought myriad other voice-recognition companies to help build out its digital assistant. VocalIQ helped to make interactions with voice-based AI systems feel more natural — something Siri has struggled with — and it had been working with other large companies, like GM, prior to the acquisition. Apple has also purchased other voice and AI-adjacent companies, including Pullstring, Turi, Tuplejump and Emotinet.
Acquired by Facebook
Acquired: March 2011
What it did: Group messaging
Facebook acquired Beluga at a crucial turning point in its history. At the time, Facebook was grappling with how to translate its tremendous growth on desktop to the new mobile era. Beluga had already built a solid following in mobile messaging, and initially, Facebook said it would keep the app going. But within a matter of months, Facebook launched its own app, Messenger, and terminated Beluga shortly after.
Acquired: December 2011
Cost: $3 million
What it did: Location-based social network networking
As Facebook worked to find a foothold in the growing mobile market, it tried to acquire Foursquare, the dominant location-based social network at the time. Foursquare rebuffed Facebook's offers, so Facebook did the next best thing: acquired Foursquare's closest competitor, Gowalla. When Gowalla shut down three months later, its CEO was reportedly working on a Facebook API that enabled developers to incorporate location data into their apps.
Branch and Potluck
Acquired: January 2014
Cost: $15 million
What it did: Link-sharing and discussion site and app
Branch, and its sister app Potluck, provided a way to share links and news articles and start conversations about those topics. You know, sort of like what News Feed does. At the time, Facebook was tinkering with the algorithm, so that it would surface more articles. When he announced the acquisition, Branch CEO Josh Miller said Facebook offered him a chance to "build Branch at Facebook scale." The following year, Branch and Potluck shut down.
Acquired by Microsoft
Acquired: April 2017
What it did: Software-development tools
Nobody seems to really understand what Intentional Software actually did, but everybody knows its founder: Charles Simonyi, a veteran of the legendary Xerox PARC lab and a longtime Microsoft executive who led the group that created Microsoft Office, which worked out pretty well. The company said it was working on software-development tools that would simplify programming, but then pivoted into "productivity scenarios for the future workforce," whatever those are.