Hope you had a rest-filled weekend (ideally capped off with Sunday night's debut of the new season of "Axios on HBO").

Today's Login is 1,365 words, a 5-minute read.

1 big thing: Big Tech's small deals pose quandary for regulators

Illustration: Sarah Grillo/Axios

As regulators review a decade of tech industry acquisitions for signs of monopolistic behavior, proposing remedies is going to be a tough challenge, Axios' Kyle Daly reports.

Why it matters: Tech companies like Google and Facebook grew gigantic in part by rolling up startups that are now fully integrated into their businesses. Despite heated antitrust rhetoric, it would be a tall order for regulators to reverse hundreds of deals or force divestitures of the essential business lines those transactions helped build.

Driving the news: Bloomberg reported last week that, when Google bought ad tech company Invite Media in 2010, the firm dumped cash to stay below the size threshold that would trigger federal scrutiny of the deal.

  • Now the FTC says it's going to review even smaller acquisitions by Google and other tech giants going back an entire decade as it weighs antitrust action.
  • The Invite Media story doesn't prove any wrongdoing, but it suggests prior acquisitions may have involved efforts to hide information from federal regulators.

By the numbers: Bloomberg counted a total of 362 acquisitions made by Alphabet/Google, Amazon, Apple, Facebook and Microsoft between 2010 and 2019 that were small enough to escape FTC review.

Where it stands: The FTC is conducting its review of small deals under its authority to perform studies outside of law enforcement investigations.

  • But FTC chairman Joe Simons isn't ruling out the possibility of enforcement action stemming from the inquiry, up to and including unwinding anticompetitive acquisitions.
  • That's on top of separate antitrust probes into Big Tech from the Justice Department, the House Judiciary antitrust panel and state attorneys general.

What's next: Candidates and policymakers like Elizabeth Warren have framed undoing anticompetitive tech mergers as a straightforward matter. But such efforts would face years of court battles and uncertain outcomes.

  • That's the case for major acquisitions that resulted in subsidiaries distinct from the core company, such as Facebook's purchase of Instagram — never mind hundreds of tiny deals.
  • "It's very hard to unscramble the eggs," Bill Baer, DOJ antitrust chief under the Obama administration, told Axios. "Once a business is integrated, especially with a technology company, it is awfully hard to unwind."

Be smart: Washington still has some tools to help counter competitive harms stemming from past mergers. Regulators could use the courts or a settlement to get companies to put up assets or money to seed a new competitor, for instance.

  • The DOJ did just that before green-lighting T-Mobile's Sprint acquisition.
  • If the FTC concludes that tech giants escaping scrutiny with their extended run of small acquisitions ultimately harmed competition, that could up the odds of tougher antitrust moves by other regulators at the Justice Department — or from Congress amending antitrust law to address the issue.
  • "I think it is challenging but realistic to change the rules going forward to allow for more scrutiny. It is much more difficult to unwind transactions that are many years old," said Baer.
2. Hedge fund wants Dorsey out at Twitter

Photo Illustration: Sarah Grillo/Axios Photo: James Brickwood/Fairfax Media via Getty Images

Hedge fund Elliott Management has built a roughly 5% stake in Twitter and is seeking the removal of Jack Dorsey as CEO.

Why it matters: Mark Zuckerberg, Google’s founders, and some other tech moguls have special voting shares that give them near-absolute control over their companies and boards. Dorsey doesn't, making him more vulnerable to ouster than most.

Be smart: Activist investors often push for changes, to little effect. Still, Elliott tends to get what it wants, particularly in Silicon Valley. At very least, the development will put added pressure on Dorsey to focus on shareholder value.

Details: Per Axios' Dan Primack, who confirmed the news with multiple sources following reports of Elliott's stake Friday, the fund's complaint appears to be twofold:

  1. Dorsey only can devote part of his attention to Twitter, given that he also runs payments company Square (in which he has a larger financial interest). And this is only exacerbated by Dorsey's plans to spend much of 2020 in Africa, to better understand the continent's fintech revolution (i.e., something that is much more pertinent to Square than to Twitter).
  2. Twitter under Dorsey has experienced consistent executive turnover and has repeatedly dropped the product innovation ball (particularly in mothballing Vine, which was TikTok before TikTok).

Flashback: Elliott is already in the middle of another tech pressure campaign, recently taking a stake in SoftBank to push for asset selloffs and a huge stock buyback.

3. Thousands petition for SXSW to be canceled

More than 15,000 people have signed a petition calling for the cancellation of the upcoming SXSW event in Austin, Texas, and Dorsey has backed out of an onstage interview with my colleague Dan Primack. However, organizers insist the event will go on as scheduled this month.

Why it matters: The show is a huge gathering that brings in tons of tourism revenue to the city, but also brings together people from all over the world into lots of tightly packed spaces.

What they're saying:

  • SXSW organizers said they are "working closely on a daily basis with local, state, and federal agencies to plan for a safe event."
"There is a lot about COVID-19 that is still unknown, but what we do know is that personal hygiene is of critical importance. We hope that people follow the science, implement the recommendations of public health agencies, and continue to participate in the activities that make our world connected."
— SXSW, in a statement to Axios
  • petition creator Shayla Lee said she is concerned about the hundreds of thousands of people who travel to Austin for the event. "I believe that having an event like this is irresponsible amid an outbreak."

In addition to all the tech conferences being scrapped or delayed, such as Game Developers Conference, Facebook's F8 and Mobile World Congress, organizers have canceled the giant CERAWeek energy trade show that was scheduled for next week in Houston.

4. AT&T launches video service aimed at cable

AT&T is launching a new TV service and a series of offers it hopes will allow it to sell TV service even when people don't want to give up their current broadband provider.

Why it matters: The streaming field is crowded, but some of the most lucrative customers are those willing to pay for live TV. This is AT&T's latest effort to go at that market.

How it works: AT&T TV, which launches nationally today, provides a cable-style bundle of channels with regional sports and more arcane offerings, on-demand options and a cloud-based DVR. It is an over-the-top service, so it works regardless of who provides broadband service, though AT&T is reserving some of its best deals for those who bundle AT&T TV with broadband service from the company as well.

  • AT&T is launching with promotional prices ranging from $49.99 to $69.99 per month for the first 12 months.
  • Customers who bundle with AT&T home internet or wireless will save $10 per month.
  • In month 13, though, prices rise substantially, to $93 to $135 per month.
  • It features a small set-top box and a voice remote and is also accessible via apps for Apple TV, smartphones and some Samsung smart TVs.

The big picture: AT&T TV joins DirecTV, DirecTV Now, U-verse TV, HBO Now, HBO Go and HBO Max in the company's stable of linear and over-the-top TV services.

Our thought bubble: I had a chance to try out the service and can confirm that setup is indeed easy and doesn't require a professional. Downloading software updates took a couple minutes, but the interactive trivia questions provided while that took place were a nice touch — and I got eight out of eight right.

  • The integration with the Google Assistant and Android apps is nice, as is the universal search, though for now that integration is limited to a handful of services, including Netflix.
  • The biggest issue I see — beyond AT&T's not currently offering the Pac-12 Network — is that the pricing is a lot like the traditional TV it hopes to replace, including two-year contracts and low teaser prices that rise substantially in the second year.

The bottom line: Perhaps the best thing AT&T TV brings is more competition into a part of the TV market known for high prices.

5. Take Note

(Not) On Tap

Trading Places

  • Adam Nash announced he is leaving his post as VP of Product for Dropbox.
  • Nokia CEO and president Rajeev Suri will step down Sept. 1 and be replaced by Fortum CEO Pekka Lundmark.


6. After you Login

This is what happens when you outsource scented candle development to a neural network.