The FTC Antitrust Probe of Facebook investigates its procurement

The company's acquisition practices are a key component of the FTC probe, the people said. Facebook revealed the FTC's antitrust investigation in its income statement last week, but gave some details.

FTC investigators are looking for evidence of whether Facebook and founder Mark Zuckerberg bought startup technology companies to prevent them from challenging Facebook's empire, the people said.

The FTC has begun to reach out to people who founded companies that Facebook bought, some of the people said.

Facebook did not immediately respond to a request for comment. In its announcement last week, Facebook said the FTC was investigating "in the areas of social networking or social media services, digital advertising and / or mobile or web-based applications."

In congressional testimony last month, Matt Perault, director of public policy at Facebook, told a subcommittee for antitrust committees in the house that the company's acquisition has driven innovation and brought together companies with complementary strengths.

Companies purchased by Facebook "have had more opportunity to innovate as part of Facebook than they would have on their own ̵[ads1]1; enhancing user experience and resulting in more choices for more people overall, not less," Perault said in prepared testimony.

A FTC spokeswoman declined to comment, the investigation comes on the heels of a separate case in which the commission fined Facebook $ 5 billion for alleged misconduct.

The company has bought about 90 companies over the past 15 years, according to data collected by S&P Global.

They include app sharing of Instagram and messaging service WhatsApp, which strengthened Facebook as a dominant force in social media and messaging.

Another acquisition that may be of interest was the acquisition of Onavo Mobile Ltd.'s behavioral technology to identify and target fast-growing companies as potential purchases or to include new product categories, T reported he Wall Street Journal in 2017. Facebook used data from Onavo in its decision to buy WhatsApp.

Documents released by British lawmakers late last year confirmed Onavo's importance to Facebook's strategy. Gradually, Facebook dropped the controversial app.

Other major technology companies, such as

Alphabet
Inc.

& # 39; s Google, has also been on a buy binge; a British blue ribbon anti-band panel said in March that the five technology companies have made more than 400 acquisitions over the past decade.

For months, the FTC has sent signals of its interest in whether technology companies are stifling competition by systematically purchasing startups that may one day challenge them.

When the commission formed a working group in February to investigate potential antitrust violations in the technology industry, Bruce Hoffman, director of the FTC's competition agency, said the case was ripe for exploration.

"This is a completely legitimate and genuine theory of competitive harm," Hoffman said in a speech last year, though he emphasized that the FTC would need "an evidentiary and financial basis" to determine that an acquired startup could really have been a significant competitor.

MR. Hoffman also warned that there could be negative consequences of turning down such acquisitions.

Large technology companies may be able to move startup technologies to market faster, and startup capital markets may shrink if the ability to be bought by a large technology company is limited, he said.

If the FTC were to find antitrust issues with some of Facebook's prior acquisitions, the commission could have a number of potential tools, from seeking a variety of certain acquisitions to placing restrictions on Facebook's behavior with some of the assets it acquired. Such an effort can lead to litigation.

The FTC's investigation is not the only antitrust control the company is facing.

Last week, the Department of Justice announced that it launched a broad review of "whether and how" online platforms have engaged in practices that reduce competition, stifle innovation or otherwise harm consumers. That includes social media, the department said.

The two-inch review by both US antitrust agencies signals the federal government is exercising considerable antitrust firepower on the company, which only recently reached a historic privacy agreement with the FTC.

State attorneys and European regulators also look into competition issues around Facebook.

Write to Brent Kendall at brent.kendall@wsj.com, John D. McKinnon at john.mckinnon@wsj.com and Deepa Seetharaman at Deepa.Seetharaman@wsj.com