The tech industry juggernauts are facing mounting challenges from regulatory hurdles and a barrage of legal battles, disrupting their pursuit of massive mergers and potentially compelling a reevaluation of business practices. Adobe Inc.'s recent decision to abandon its proposed $20 billion acquisition of design-tools maker Figma underscores the intensifying pressure from European regulators. The joint statement from the two companies cited the absence of a clear path to secure necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority.
The regulatory landscape is equally tumultuous in the United States, where Alphabet Inc.'s Google braces for potential legal setbacks. Following a recent court defeat, with a jury deeming its app store anticompetitive, Google faces heightened scrutiny over its business practices. The Justice Department's antitrust lawsuit against Google's search business adds another layer of complexity, posing potential challenges to the tech giant's operations.
A trio of pivotal court battles is at the forefront: the Justice Department's antitrust lawsuit against Google, the Federal Trade Commission's litigation against Amazon.com, and the antitrust case involving Google brought by Epic Games. A recent federal jury ruling favored Epic Games, which accused Google's Play app store of operating as an illegal monopoly, prompting Google to appeal the decision.
Notably, antitrust laws, rooted in the past, pose limitations for federal regulators grappling with 21st-century technology. Congressional passage of substantial tech laws remains unlikely, leaving federal judges hesitant to apply antiquated antitrust laws to modern companies, given the risk of potential overturning of decisions.
FTC Chair Lina Khan and Jonathan Kanter, Assistant Attorney General for the Justice Department's antitrust division, are forging ahead to challenge mega-mergers and related business practices. Even if preliminary injunctions falter, legal experts emphasize that the threat of federal action can deter companies, particularly small and medium-sized enterprises, from pursuing deals that may incur significant legal fees.
While some deals proceed with concessions, as seen in Microsoft's acquisition of Activision Blizzard, regulatory opposition creates hurdles and prompts companies to reevaluate their strategies. Tech giants appear to operate under the maxim of "merge now while you can," recognizing the challenges of disrupting vertical deals.
The spotlight now turns to the FTC's lawsuit against Amazon, alleging the exploitation of monopoly power to the detriment of consumers and businesses. Internal documents indicate discussions within Amazon about punitive pricing policies for sellers. As regulatory scrutiny intensifies, tech companies navigate a landscape where legal threats impact deal dynamics and strategic considerations.
