The FTC has never challenged a merger based on the anticompetitive acquisition of data.
Salesforce CEO Marc Benioff says U.S. regulators didn’t pay proper attention to Microsoft’s purchase of LinkedIn, which he sees as a grab for data, not an acquisition of a social network.
Salesforce entered Microsoft’s territory when it acquired Quip, a word processing app, earlier this year. “Microsoft wants to maintain their monopoly, and doesn’t want innovation in that area,” said Benioff in an interview Monday with Recode’s Kara Swisher at Code Enterprise in San Francisco. “So they’re going to say, ‘Now we’re going to integrate all this LinkedIn stuff into Office, so why would you want Quip?’”
Benioff said he pressed the Federal Trade Commission to review Microsoft’s LinkedIn deal for potential antitrust violations, but the agency decided not to investigate. Benioff, of course, made his own play for LinkedIn but failed to reach a deal.
Benioff contends the acquisition is anticompetitive because Microsoft can hinder access to LinkedIn’s data, making it harder for competitors.
When Salesforce was in the running to acquire LinkedIn, Benioff said he ran into Microsoft executive Scott Guthrie at a conference who explained what the company was planning to do with LinkedIn’s data.
[Guthrie] started talking about how he was going to wind the LinkedIn data with their CRM data, with their productivity data, with all the other data streams that Microsoft has — and especially proprietary data streams — to create what he said was essentially a barrier to entry for other player in business productivity, where they have a monopoly or other markets. And that was their vision … And that was something where we said, woah, that sounds like something that’s illegal actually.
While the FTC doesn’t think this isn’t an anticompetitive practice worth looking at, Margrethe Vestager, the European Commission’s antitrust chief, does.
Margrethe Vestager needs to make decision on what does this mean for the ability for companies to trade in data, and we’ve seen that companies are acquiring companies to potentially create proprietary data streams to create barriers of competition, so if the U.S. government isn’t going to look at that then another governet will have to.
When the FTC considers the conditions for a merger between two software companies that monetize user data, the agency has typically focused on consumer protection with regard to privacy, not antitrust.
The FTC has never challenged a merger on the basis of anticompetitive practices over user data, according to Deborah Feinstein, the director of the FTC’s Bureau of Competition. If the FTC does start to investigate mergers based on whether data sharing is anticompetitive, that could end up blocking a lot of future deals.
When Facebook put in a bid to acquire WhatsApp in 2014, for example, the FTC’s concerns were about user privacy and whether WhatsApp would continue to honor its privacy policies, which are more strict than Facebook’s, after the merger — not antitrust.
In August, however, WhatsApp adjusted its privacy policies so it could share user data with Facebook to “show more relevant ads,” according to the company.
Whether Salesforce, which itself is a $7.5 billion company, will be truly unable to compete against a Microsoft/LinkedIn combination in the productivity software space is hard to tell.
But one thing is clear: When companies are sold, their data goes with them. And data can turn a whole lot of profit.
Recode reached out to the FTC for comment, but didn’t hear back by the time of publication.