The howls will begin the minute the FTC’s lawsuit against Amazon hits the clerk’s desk. “The FTC hates business!” “Lina Khan is a communist!” “This government is controlled by the far left!”
Of course that’s what most in the business community will say. It would be novel if they didn’t.
But they’re wrong.
I’m an early stage venture capitalist. My fund, Tusk Venture Partners, invests in seed and Series A startups, typically in highly regulated industries – think companies like FanDuel, Coinbase, and Lemonade, Ro, Bird, Wheel, Alma, Circle, Sunday and so on.
What you don’t see on that list is anything that could attempt to compete with Amazon or Meta or Apple or Microsoft or Google. Why? Because there is no way to compete if the incumbents’ dominance over their respective markets is allowed to grow, completely unchecked.
When we invest, we’re ultimately solving for the company’s exit. Typically, that comes from an IPO or an acquisition. While IPOs generate most of the attention, acquisitions are more common. When we think through our possible exit, the first question is “Would x (the larger competitor) be more likely to buy this company or build their own version?” The second question is, “Can x squash our startup before they even get off the ground?”
Whenever we look at a startup that would directly compete with a company like Amazon, the answer to the second question is always, “yes, definitely.” And we don’t invest.
I don’t have any animus towards Amazon. I order stuff from them all the time. I probably buy 75 books each year on Kindle even though I own an independent bookstore in Manhattan. I think Amazon is a great company. But I also think that allowing them to continue to dominate the entire retail market unimpeded is a death knell for the economy in 10 to 20 years.
Ultimately, every company, now matter how insurgent they once were, grows stagnant. They become a bureaucracy beset by internal politics and a CYA mentality. That’s why the behemoths of my childhood, companies like IBM and GE, are a second thought today. Luckily, as these earlier giants started to falter, companies like Apple and Microsoft took off, and companies like Google, Amazon and Meta came along.
The results have been staggering. Apple has increased its US employees by 1,500% since 1998. Between 2001 and 2018, Alphabet (Google’s parent company) grew its job count 347 times over.
But would Google, for example, have gotten as far had the Department of Justice not pursued antitrust litigation against Microsoft in the late 1990s? Unlikely. Microsoft’s overwhelmingly dominant market power and position would have allowed them to force computer manufacturers to use Internet Explorer instead of Google.
The same problem holds true today. Amazon, great as they are, will ultimately falter. They’re subject to gravity just like everyone else. And then either one of two things will have happened: it will have been feasible to invest in potential competitors to Amazon, dozens will have emerged, a few will succeed and they’re ready to replace Amazon as a major employer. Or, Amazon continued to amass so much power by controlling pricing, controlling the entire marketplace, that investors like me never felt comfortable backing a competitor and when Amazon lags, no one can fill the void.
That’s where the FTC comes in. Their job isn’t to wag their finger at big businesses and tell them that making money is evil (We already have AOC and Bernie Sanders for that). Their job is, yes, to protect current businesses who are forced to both advertise on Amazon and to accept far worse placement in each product search because they can’t afford not to be on the platform. But it’s also to look ten, twenty years into the future and see which industries may not have the openings for incredible new companies to emerge simply because the incumbents are too big to ever challenge.
When the case goes to court, Amazon will argue that none of their practices violate existing regulations. If they manage to make that case successfully, good for them. But as an early stage investor, I need to at least see that the government recognizes that new market entrants can’t compete if the existing giants are allowed to deploy whatever competitive practices they want. If there’s no rule of law, there’s no future market worth betting on.
Whether or not FTC succeeds in court, the lawsuit’s very filing shows that the agency at least recognizes that what’s good for tech giants and their current investors is not necessarily what’s good for tech startups and the economy’s long-term needs. That’s exactly the kind of regulation – and regulators – we both want and need.
Bradley Tusk is an early-stage venture capitalist.
Paxton sued Google in 2022 for allegedly unlawfully tracking and collecting the private data of users.
The attorney general said the settlement, which covers allegations in two separate lawsuits against the search engine and app giant, dwarfed all past settlements by other states with Google for similar data privacy violations.
Google’s settlement comes nearly 10 months after Paxton obtained a $1.4 billion settlement for Texas from Meta, the parent company of Facebook and Instagram, to resolve claims of unauthorized use of biometric data by users of those popular social media platforms.
“In Texas, Big Tech is not above the law,” Paxton said in a statement on Friday.
“For years, Google secretly tracked people’s movements, private searches, and even their voiceprints and facial geometry through their products and services. I fought back and won,” said Paxton.
“This $1.375 billion settlement is a major win for Texans’ privacy and tells companies that they will pay for abusing our trust.”
Google spokesman Jose Castaneda said the company did not admit any wrongdoing or liability in the settlement, which involves allegations related to the Chrome browser’s incognito setting, disclosures related to location history on the Google Maps app, and biometric claims related to Google Photo.
Castaneda said Google does not have to make any changes to products in connection with the settlement and that all of the policy changes that the company made in connection with the allegations were previously announced or implemented.
“This settles a raft of old claims, many of which have already been resolved elsewhere, concerning product policies we have long since changed,” Castaneda said.
“We are pleased to put them behind us, and we will continue to build robust privacy controls into our services.”
Virtual care company Omada Health filed for an IPO on Friday, the latest digital health company that’s signaled its intent to hit the public markets despite a turbulent economy.
Founded in 2012, Omada offers virtual care programs to support patients with chronic conditions like prediabetes, diabetes and hypertension. The company describes its approach as a “between-visit care model” that is complementary to the broader health-care ecosystem, according to its prospectus.
Revenue increased 57% in the first quarter to $55 million, up from $35.1 million during the same period last year, the filing said. The San Francisco-based company generated $169.8 million in revenue during 2024, up 38% from $122.8 million the previous year.
Omada’s net loss narrowed to $9.4 million during its first quarter from $19 million during the same period last year. It reported a net loss of $47.1 million in 2024, compared to a $67.5 million net loss during 2023.
The IPO market has been largely dormant across the tech sector for the past three years, and within digital health, it’s been almost completely dead. After President Donald Trump announced a sweeping tariff policy that plunged U.S. markets into turmoil last month, taking a company public is an even riskier endeavor. Online lender Klarna delayed its long-anticipated IPO, as did ticket marketplace StubHub.
But Omada Health isn’t the first digital health company to file for its public market debut this year. Virtual physical therapy startup Hinge Health filed its prospectus in March, and provided an update with its first-quarter earnings on Monday, a signal to investors that it’s looking to forge ahead.
Omada contracts with employers, and the company said it works with more than 2,000 customers and supports 679,000 members as of March 31. More than 156 million Americans suffer from at least one chronic condition, so there is a significant market opportunity, according to the company’s filing.
In 2022, Omada announced a $192 million funding round that pushed its valuation above $1 billion. U.S. Venture Partners, Andreessen Horowitz and Fidelity’s FMR LLC are the largest outside shareholders in the company, each owning between 9% and 10% of the stock.
“To our prospective shareholders, thank you for learning more about Omada. I invite you join our journey,” Omada co-founder and CEO Sean Duffy said in the filing. “In front of us is a unique chance to build a promising and successful business while truly changing lives.”
Liz Reid, vice president, search, Google speaks during an event in New Delhi on December 19, 2022.
Sajjad Hussain | AFP | Getty Images
Testimony in Google‘s antitrust search remedies trial that wrapped hearings Friday shows how the company is calculating possible changes proposed by the Department of Justice.
Google head of search Liz Reid testified in court Tuesday that the company would need to divert between 1,000 and 2,000 employees, roughly 20% of Google’s search organization, to carry out some of the proposed remedies, a source with knowledge of the proceedings confirmed.
The testimony comes during the final days of the remedies trial, which will determine what penalties should be taken against Google after a judge last year ruled the company has held an illegal monopoly in its core market of internet search.
The DOJ, which filed the original antitrust suit and proposed remedies, asked the judge to force Google to share its data used for generating search results, such as click data. It also asked for the company to remove the use of “compelled syndication,” which refers to the practice of making certain deals with companies to ensure its search engine remains the default choice in browsers and smartphones.
Read more CNBC tech news
Google pays Apple billions of dollars per year to be the default search engine on iPhones. It’s lucrative for Apple and a valuable way for Google to get more search volume and users.
Apple’s SVP of Services Eddy Cue testified Wednesday that Apple chooses to feature Google because it’s “the best search engine.”
The DOJ also proposed the company divest its Chrome browser but that was not included in Reid’s initial calculation, the source confirmed.
Reid on Tuesday said Google’s proprietary “Knowledge Graph” database, which it uses to surface search results, contains more than 500 billion facts, according to the source, and that Google has invested more than $20 billion in engineering costs and content acquisition over more than a decade.
“People ask Google questions they wouldn’t ask anyone else,” she said, according to the source.
Reid echoed Google’s argument that sharing its data would create privacy risks, the source confirmed.
Closing arguments for the search remedies trial will take place May 29th and 30th, followed by the judge’s decision expected in August.
The company faces a separate remedies trial for its advertising tech business, which is scheduled to begin Sept. 22.