In the ever-evolving landscape of business, the wisdom of Arthur Blank, co-founder of The Home Depot, resonates powerfully: “If you don’t change, you are a dead duck.” Blank’s words capture the essence of entrepreneurial spirit and the driving force behind the remarkable success story of The Home Depot, which thrived against all odds. This sentiment also serves as a fitting introduction to the ongoing discourse surrounding FTC Chair Lina Khan’s approach to mergers and acquisitions (M&A). Khan’s skepticism toward corporate dominance has steered her policies toward a more hostile stance on mergers, but this article, penned by Market Institute Senior Fellow John Tamny in Real Clear Markets, offers a compelling argument against such rigidity.
It reminds us that stagnation is the enemy of progress in the business world and that thriving companies must constantly seek the future through acquisitions, even if it challenges their present dominance. Tamny’s call for a reevaluation of Khan’s M&A policies highlights the intricate dance between competition and innovation that defines the modern commercial landscape.
“The obvious source of Khan’s hostility is her belief that acquisitions enhance the long-term prowess of the presently dominant. To use but one example, it’s no reach to suggest that if Google were to offer to purchase DuckDuckGo, or if Meta were to express interest in Raya, Khan would block each acquisition. Her alleged reasoning would be that Google is already too powerful in search, and Meta too powerful in social networking. The reasoning would be flawed.
Commercial history is littered with once great companies that didn’t evolve. In other words, the stationary state in business is the path to obsolescence.
Applied to Khan’s reflexive hostility to mergers, it’s unlikely that investors would finance the hypotheticals involving Google and Meta, and they wouldn’t for the same reasons that Google and Meta would be highly unlikely to pursue DuckDuckGo and Raya. And they wouldn’t simply because in the real world of commerce, if you’re focused on the present you’re surely stuck in the past. Put another way, to the powers-that-be at Google and Meta, search and social networking are so very yesterday.
This is what must be kept in mind in light of Khan’s stance on M&A. Rare is the near-term successful business that stays that way by resting on its laurels, or by pursuing acquisitions that enhance what makes them presently great. Instead, mergers and acquisitions are intrepid (and frequently incorrect) speculations about what will meet and lead the needs of consumers and users in the future.
All of which speaks to how dangerous Khan’s M&A policy stance is. The simple truth is that the successful businesses of today are well aware of Marcus’s crucial observation that the “history of retailing is filled with once-great companies that disappeared off of the face of the earth.” Aware of this, they actively acquire other businesses big and small not because they’re dominant, but precisely because they’re not. Fully aware that the present is once again the past in commerce, the near-term excellent are feverishly searching for what’s ahead so that they can avoid the dismal fate of all too many once-great companies.”