Nascent tech acquisitions have been the subject of renewed regulatory and antitrust scrutiny in recent years. These acquisitions can often be very small—hundreds of tech deals have occurred in the past decade below the current reporting threshold of $101 million—and the current merger review process of the Federal Trade Commission (FTC) often fails to capture the harms unique to these early-stage deals. This Note argues that the FTC should look to another government agency—the Committee on Foreign Investment in the United States (CFIUS)—and learn from their experience reviewing very small but sensitive tech deals. CFIUS examines all foreign investment into companies that control technologies that may be sensitive for U.S. national security, focusing over the past few years on Chinese investment into U.S. start-ups as an area of concern. This Note examines the resources and renewed mission CFIUS received from Congress through the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) and argues that the FTC merger process can undergo a similar overhaul. Specifically, this Note lays out the arguments for the creation of a CFIUS-style critical technologies pilot program run by the FTC, which would allow the antitrust enforcement agency to orient its mission toward addressing emerging technological markets.

The full text of this Note can be found by clicking the PDF link to the left.


On August 19, 2021, the Federal Trade Commission (FTC) filed an amended complaint in its ongoing case against Meta, alleging that the social media giant had run afoul of federal antitrust law by adhering to the internal philosophy that “it is better to buy than compete.” 1 First Amended Complaint for Injunctive and Other Equitable Relief at 1, Fed. Trade Comm’n v. Facebook, Inc., No. 1:20-cv-03590-JEB (D.D.C. Aug. 19, 2021) [hereinafter First Amended Complaint] (emphasis omitted). This Note refers to the company as “Meta” for the sake of consistency and current accuracy, although many of the actions discussed occurred when the company was still known as “Facebook.” Press Release, Meta, Introducing Meta: A Social Technology Company (Oct. 28, 2021),
2021/10/facebook-company-is-now-meta/ [] [hereinafter Meta, Introducing Meta].
Central to the complaint are Meta’s 2012 acquisition of Instagram and 2014 acquisition of WhatsApp. 2 First Amended Complaint, supra note 1, at 6. Referring to Meta’s “anticompetitive spending spree,” the agency alleged that Meta “systematically tracked potential rivals” and “[bought] up new innovators that were succeeding where [Meta] failed.” 3 Id. at 1, 3.

But an acquisition not mentioned in the FTC complaint may play an even bigger role in shaping Meta’s future. In 2014, Meta bought Oculus, a company that designed virtual reality (VR) gaming glasses. 4 Todd Haselton, Facebook’s $2 Billion Bet on Oculus Looks Like One of Mark Zuckerberg’s Rare Mistakes, CNBC (Oct. 11, 2017),
facebook-2-billion-bet-on-oculus-not-paying-off-commentary.html [].
For years after its 2014 acquisition, Oculus and its VR gaming glasses were not widely used like Instagram. 5 Id. (“[T]here will be 20 million [VR] headsets in the market by 2020 . . . . Instagram exploded from 30 million users . . . to more than 800 million. WhatsApp . . . now has more than 1.3 billion users. The return on those buys . . . seems to have been greater than . . . from Oculus.”). Meta’s own press release announcing the deal noted that VR applications “beyond gaming are in their nascent stages.” 6 Press Release, Meta, Facebook to Acquire Oculus (Mar. 25, 2014), https:// [] [hereinafter Meta, Facebook to Acquire Oculus].
The press release, however, also hinted at Meta’s future plans—“to extend Oculus’ existing advantage in gaming to new verticals, including communications, media and entertainment, [and] education.” 7 Id. Meta also noted that VR technology “is a strong candidate to emerge as the next social and communications platform.” 8 Id. Oculus symbolized Meta’s foray into a tentative side business in a newly emerging market; Meta’s bread and butter remained social media and online ads. 9 Elizabeth Culliford & Nivedita Balu, Facebook Pours Billions Into “Metaverse” as Ad Business Falters, Reuters (Oct. 26, 2021),
facebook-revenue-misses-estimates-apples-privacy-rules-bite-2021-10-25/ (on file with the Columbia Law Review) (reporting that “[t]he company’s total revenue, which primarily consists of ad sales, rose to $29.01 billion in the third quarter” of 2021).
But this shift in strategy was officially codified on October 28, 2021, when then-Facebook announced that it was changing its name to Meta as part of its effort to become a company that “bring[s] the metaverse to life.” 10 Meta, Introducing Meta, supra note 1. More than seven years after its acquisition, Oculus’s Quest VR headset, rebranded as Meta Quest, now stands at the center of Meta’s vision for its future. 11 Oscar Gonzalez, Facebook Drops Oculus Name as Part of Meta Rebrand, CNET (Oct. 28, 2021), [] (“[T]he original Oculus vision remains deeply embedded in how Meta will continue to drive mass adoption for VR today.”).

The dramatic concentration in the tech industry over the previous decade has drawn increasing antitrust scrutiny. Meta currently owns the four most downloaded apps of the last decade—Facebook, Facebook Messenger, WhatsApp, and Instagram. 12 Sam Shead, Facebook Owns the Four Most Downloaded Apps of the Decade, BBC (Dec. 18, 2019), [
Over three decades, a group of companies known as GAFAM (Google, Apple, Facebook, Amazon, and Microsoft) have acquired 770 start-ups, including at least twenty-nine acquisitions worth over $1 billion. 13 Naushad K. Cherrayil, Microsoft Acquires More Unicorns Among Big Five Technology Companies, TechRadar (June 27, 2020), [https://]. The temporal endurance, as well as sheer size of GAFAM, has been cited as additional evidence of the failure of disciplining competition. See Mark A. Lemley & Andrew McCreary, Exit Strategy, 101 B.U. L. Rev. 1, 5 (2021) (“Despite the vaunted speed of technological change, Amazon, Apple, Google, Microsoft, and Netflix are all more than twenty years old. Even the baby of the dominant firms, Facebook, is over fifteen years old. Where is the next Amazon, the next Facebook, the next Google?”).
While the biggest deals draw headlines, hundreds of these acquisitions occur at the smaller end of the dealmaking spectrum. In 2021, Apple CEO Tim Cook noted that Apple had acquired about 100 companies over the past six years, which averages out to an acquisition every three to four weeks. 14 Justin Harper, Apple Buys a Company Every Three to Four Weeks, BBC (Feb. 24, 2021), []. Tech concentration has attracted the scrutiny of Congress, with the House Subcommittee on Antitrust releasing a landmark report arguing that “[t]he effects of this significant and durable market power are costly. . . . [T]hese firms wield their dominance in ways that erode entrepreneurship, degrade Americans’ privacy online, and undermine the vibrancy of the free and diverse press. The result is less innovation, fewer choices for consumers, and a weakened democracy.” 15 Majority Staff of H. Subcomm. on Antitrust, Com. & Admin. L. of the Comm. on the Judiciary, 116th Cong., Investigation of Competition in Digital Markets: Majority Staff Report and Recommendations 7 (Comm. Print 2020) [hereinafter Majority Staff Report].

While much attention has been focused on what to do about the biggest deals of the past decade, less attention has been given to the small, early-stage deals still occurring apace in the tech industry today. 16 James Fontanella-Khan, Stefania Palma & Kiran Stacey, Big Tech Companies Snap Up Smaller Rivals at Record Pace, Fin. Times (Sept. 19, 2021),
content/e2e34de1-c21b-4963-91e3-12dff5c69ba4 (on file with the Columbia Law Review) (“[T]ech companies have spent at least $264bn buying up potential rivals worth less than $1bn since the start of 2021—double the previous record registered in 2000 during the dotcom boom.”).
Acquisitions of small start-ups in new and developing fields of technology—nascent acquisitions—pose a unique problem for regulators. 17 C. Scott Hemphill & Tim Wu, Nascent Competitors, 168 U. Pa. L. Rev. 1879, 1886–89 (2020); see also infra section II.A.2. Many of these deals lie below the $101 million threshold set by the Hart–Scott–Rodino (HSR) Act, rendering them outside the realm of transactions that must be reported to the antitrust enforcement agencies. 18 15 U.S.C. § 18a (2018); infra section I.B; see also Thomas G. Wollmann, Stealth Consolidation: Evidence From an Amendment to the Hart–Scott–Rodino Act, 1 Am. Econ. Rev.: Insights 77, 77 (2019) (noting that this process “can result in stealth consolidation: anticompetitive deals whose individual size enables them to escape regulatory scrutiny but whose cumulative effect is large”). But even when regulators know of the transactions, these deals largely exist outside of the framework of what current antitrust law is designed to tackle. The FTC currently defines mergers as either horizontal or vertical, evaluating companies based on the idea of definable product markets and current measurements of market power. 19 DOJ & FTC, Horizontal Merger Guidelines § 1 (2010),
system/files/documents/public_statements/804291/100819hmg.pdf [
XM3U-DL8V] [hereinafter Horizontal Merger Guidelines]; DOJ & FTC, Vertical Merger Guidelines § 2 (2020), [] [hereinafter Vertical Merger Guidelines]; see also infra section I.A.
But in the case of digital start-ups:

The more plausible threat is from a startup that offers a differentiated version, a complement, or some novel innovation that has distinctive appeal. As a result, many of these acquisitions are only partially horizontal or not horizontal at all. . . . [M]ergers between firms whose relationship is neither horizontal nor vertical are rarely challenged, but this is where the startup-acquisition threat is most pronounced. 20 Herbert Hovenkamp, Antitrust and Platform Monopoly, 130 Yale L.J. 1952, 2042 (2021); see also Lemley & McCreary, supra note 13, at 9 (“An adjacent challenger whose forte is different from the dominant firm’s may nonetheless . . . render the incumbent’s obsolete. . . . [J]ust as smartphone-based maps overtook paper ones, autonomous vehicles may soon overtake some smartphone-based mapping . . . . [T]hese . . . [orthogonal] acquisitions . . . should concern us most.”).

Another government agency has experience tackling a similar problem and may provide useful lessons for the FTC’s future. In 2018, Congress passed the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), transforming the Committee on Foreign Investment in the United States (CFIUS) by significantly upgrading the committee’s jurisdictional reach and resources for monitoring global technology flows. 21 Foreign Investment Risk Review Modernization Act of 2018 § 1701, 50 U.S.C. § 4565 (2018); Robert Kim & Grace Maral Burnett, Analysis: How Old CFIUS Grappled With New Challenges, Bloomberg L. (May 9, 2019),
bloomberg-law-analysis/analysis-how-old-cfius-grappled-with-new-challenges (on file with the Columbia Law Review); see also James K. Jackson, Cong. Rsch. Serv., RL33388, The Committee on Foreign Investment in the United States (CFIUS) 11–12 (2020) (“In general, FIRRMA . . . [b]roadens the scope of transactions under CFIUS’ purview . . . [and] [p]rovides for additional factors for consideration . . . [and] [p]rovides for more staff.”).
At first glance, the two regulatory regimes—domestic antitrust merger review and national security review of foreign direct investment—do not appear to have similar aims. Digging deeper, however, reveals the parallels. The passage of FIRRMA came after years of mounting concern about Chinese investment in and access to U.S. technology. 22 Jackson, supra note 21, at 11 (“During the 115th Congress, many Members expressed concerns over China’s growing investment in the United States, particularly in the technology sector.”). Chinese-owned companies utilized mergers, acquisitions, joint ventures, and more to gain access to technologies that could become the nexus points of future geopolitical competition. 23 See id. at 36 (“Chinese investors were the most active in acquisitions, takeovers, or mergers during the 2015-2017 period, accounting for 26% of the total number of transactions.”). The crisis built to a point where Congress needed to give CFIUS additional tools to stop tech deals that the committee previously failed to see or act on. FIRRMA created a mandatory filing regime for critical technology-related transactions and expanded CFIUS’s ability to review non-notified transactions, empowering the committee to scan a broader universe of business transactions for national security risks. 24 Chase D. Kaniecki & Pete Young, A Look Behind the CFIUS Non-Notified Process Curtain; How It Works and How to Handle Outreach From CFIUS, Cleary Gottlieb: Cleary Foreign Inv. & Int’l Trade Watch (Oct. 14, 2021),
10/a-look-behind-the-cfius-non-notified-process-curtain-how-it-works-and-how-to-handle-outreach-from-cfius/ []; see also Jackson, supra note 21, at 1.

Domestic antitrust law surrounding tech acquisitions may be at a similar political tipping point. Capitol Hill has held multiple hearings about dominant tech firms’ acquisitions of their competitors—with some legislators signaling an appetite to empower antitrust enforcement agen­cies with a mandate to more aggressively tackle this decade-long trend. 25 See Press Release, Jerrold Nadler, Chairman, H. Comm. on the Judiciary, House Judiciary Antitrust Subcommittee Announces Series of Hearings on Proposals to Curb the Dominance of Online Platforms and Modernize Antitrust Law (Feb. 18, 2021), https:// [
MT3P-RUE2]; infra section II.A.3. Legislation being debated in Congress includes the Ending Platform Monopolies Act, which addresses incumbent platform conflicts of interest; the American Choice and Innovation Online Act, which prohibits dominant platform self-preferencing; and the Platform Competition and Opportunity Act, which would “shift the burden of proof in merger cases to dominant platforms.” Lauren Feiner, Lawmakers Unveil Major Bipartisan Antitrust Reforms that Could Reshape Amazon, Apple, Facebook and Google, CNBC (June 11, 2021), [
R588-7JRL] (last updated Dec. 13, 2021). Recent reporting has indicated that the American Choice and Innovation Online Act “has gained significant traction” due to support from Senator Chuck Grassley and other Republicans. Lauren Feiner, 2022 Will Be the ‘Do or Die’ Moment for Congress to Take Action Against Big Tech, CNBC (Dec. 31, 2021), [].
But the parallels between CFIUS and tech antitrust do not end at more aggressive enforcement—the CFIUS idea of “critical technology” also captures an essential element that is missing from consideration in current antitrust law. The nascent acquisitions drawing the most concern in antitrust literature involve companies that offer products that are not easily classified as substitutes or complements when compared with incumbents’ current market products. In these cases, it is difficult to say whether the firms are competitors at all. 26 Lemley & McCreary, supra note 13, at 92–94 (discussing how it was unclear whether Microsoft’s Internet Explorer competed directly with Netscape’s internet browser during the inchoate stages of the business); id. at 92 (“Does Google compete with Facebook? Did Facebook compete with WhatsApp before it bought them? The services have overlapping customers but serve different purposes.”). The unique concerns surrounding these acquisitions focus on (1) the early-stage nature of the technology and market in which the acquiree operates and (2) a concern that whomever controls this technology will wield undue influence in shaping future technology markets. 27 Hemphill & Wu, supra note 17, at 1887 (“[N]ascent competitors can hold the promise of offering fresh competition for the market, not just in the market. They have the capacity to displace an incumbent through a paradigm shift—for example, a new platform for developing software or decoding a genome.”); id. (“[A] nascent competitor is relevant due to its promise of future innovation. Its potency is not yet fully developed and hence unproven.”). In short, while most proposals addressing tech acquisitions focus on incumbent power and actions, this Note posits that the nature of the technology being acquired is a key determinant of the anticompetitive concern an acquisition should raise.

This Note argues that the FTC should develop its own “critical technologies” pilot program for merger review, creating a system that man­dates reporting of all acquisitions related to certain nascent technologies regardless of the size of the transaction or whether it would traditionally raise anticompetitive concerns. 28 Such a program would mandate reporting of transactions below the current HSR reporting threshold, which may require amending the HSR Act. See infra sections I.B and III.B.2 for more information on the program design. Alternatively, without altering the HSR statute, the FTC could enforce such a voluntary filing with an expanded program examining and pursuing anticompetitive concerns raised by HSR non-reportable transactions. This ex­panded program for non-reportable transactions would rely on the FTC’s existing authority to examine such deals and be modeled after CFIUS’s expanded oversight of non-notified deals. Under this framework, the FTC would decide which technologies it believes are critical to future economic infra­structure and innovation—possibly including, but not limited to, acquisi­tions related to augmented reality (AR), VR, cloud computing, cryptocur­rencies, 5G technology, and certain types of artificial intelligence (AI)—and mandate reporting of all acquisitions in those industries, re­gardless of transaction size. 29 See, e.g., Frank Chaparro, Crypto Industry M&A Activity Surged 131% in 2021, The Block (Dec. 20, 2021), [] (“Cryptocurrency deal-making clocked in record volumes after a frenzied year for merger and acquisitions, with approximately $6.1 billion in M&A volume driven by crypto-native, finance, and technology companies.”); Sheryl Estrada, Dealmaking Is on a Tear—And There’s No Sign of a Slowdown in 2022, Fortune (Dec. 15, 2021), (on file with the Columbia Law Review) (“[Y]ou have this kind of acceleration of technological capability development that’s driven by the increased processing power revolution of 5G in digital. [Regarding] infrastructure that’s driving the software categories, think about cloud technologies and artificial intelligence.” (internal quotations marks omitted) (quoting Barak Ravid, an EY-Parthenon expert on tech M&A)); Scott Stein, The AR, VR Future Coming in 2022: What We Learned From CES, CNET (Jan. 10, 2022), [] (describing AR/VR competition from Meta, Apple, Microsoft, and other major technology firms). Such a program would allow the FTC to name and focus on the cause of concern raised by these transactions: Regulators believe this acquiree’s technology will play a central role in the continued develop­ment of digital platforms and they will take special care in review­ing tech­nology with strong potential to leapfrog or displace current incumbents.

This forward-looking approach can prevent and complement the much-discussed remedy of retrospectively breaking up “Big Tech” companies. 30 Lemley & McCreary, supra note 13, at 72 (“Whether or not we would break up tech incumbents, slowing acquisitions . . . seems both independently desirable and more feasible than breaking the companies up altogether or compelling interoperability. Society has an interest in encouraging more productive startups to stay in business or . . . to sell to someone other than incumbents.”). CFIUS, while still imperfect, took a major step forward in catching up with the new realities of the tech industry through the 2018 passage of FIRRMA. The political moment may be ripe for a similar system for the FTC. Part I of this Note provides an overview of current antitrust law on premerger notification and merger review. Part II examines the problem of nascent tech acquisitions, tracking both the history of the tech industry and the academic discussion surrounding tech concentration. Part II then analyzes the parallels between the FTC’s nascent tech acquisition problem and the issues that CFIUS was facing before the passage of FIRRMA. Part III lays out the arguments for the creation of a CFIUS-style critical technol­ogies pilot program run by the FTC, which would allow the antitrust enforcement agency to orient its mission toward addressing emerging technological markets.