According to a Federal Trade Commission report, hundreds of acquisitions by U.S. tech-heavyweights went beneath the radar of merger watchdogs, fuelling the businesses' uncontrolled development in the digital economy.

Data on acquisitions by Apple Inc., Amazon.com Inc., Alphabet Inc.'s Google, and Microsoft Corp. demonstrate that antitrust enforcers must be more aggressive in ensuring firms aren't exploiting "loopholes" to avoid reporting acquisitions to regulators, as per FTC Chair Lina Khan on Wednesday.

"This study highlights the systemic nature of their acquisition strategy," Khan said about the tech companies during an FTC public meeting. "Digital markets, in particular, reveal how smaller transactions invite vigilance."

The findings might strengthen claims that competition authorities should increase their examination of digital platform acquisitions to limit their dominance. President Joe Biden promised stronger merger enforcement against internet corporations in July, claiming that the industry's top players have exploited mergers to stifle rising challenges to their operations.

"Too often, federal agencies have not blocked, conditioned, or, in some cases, meaningfully examined these acquisitions," the administration said.

The data comes from a study announced last year by the FTC to investigate purchases made by the five digital giants between 2010 and 2019 to better understand if acquisitions made outside the gaze of antitrust regulators might be hurting competition.

The FTC issued orders ordering the five firms to submit information regarding previous acquisitions that were not reported to antitrust regulators. The businesses identified 819 such transactions, which included the purchase of voting control of a company, partial investments, patent acquisitions, and what the FTC referred to as "hiring events," in which a group of employees was hired from another company.

Although the FTC did not name particular deals by firms, one example is Facebook's $400 million acquisition of picture repository Giphy last year. Bloomberg News reported last month that Giphy paid a dividend to investors before the takeover. While entirely lawful, the payment reduced the value of Giphy's assets to the point that antitrust regulators did not need to be alerted of the transaction under the reporting standards in place at the time.

Antitrust regulators examine only a small percentage of the transactions that take place each year. Between October 2018 and September 2019, the most recent period recorded by the FTC and the Justice Department, which share antitrust obligations, slightly more than 2,000 transactions were registered with the government. According to Bloomberg statistics, government assessments account for approximately 10% of the almost 22,000 deals announced in that period involving a US business.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 established the United States' mechanism for merger review. Companies are required by law to inform antitrust regulators of transactions that satisfy yearly modified standards. Transactions worth $92 million or less are not required to be recorded, but those for more than $368 million are. The reporting requirements for transactions between $92 million and $368 million are dependent on the buyer's and seller's assets and sales.

Those figures are considerably below the multibillion-dollar transactions that usually get the most attention. The rationale for the cutoffs is that minor transactions do not pose antitrust issues, and scrutinizing every transaction would be a waste of time.

More agreements, on the other hand, may put a burden on resources at the Justice Department and the FTC. The FTC has stated that it is trying to keep up with this year's record merger volume and has warned that it may prolong merger evaluations that cannot be completed within a 30-day timeframe.

According to Khan, the report demonstrates that technology corporations are committing money to acquire startups, patent portfolios, and technical expertise outside of the scrutiny of antitrust authorities. She believes the FTC is "unjustifiably" enabling businesses to make deals without examination.

"While wider HSR changes are long overdue, antitrust agencies must also protect against too permissive interpretations that handicap us," Khan added, referring to the existing statute.