In the seven months since Lina Khan took over as chairman of the U.S. Federal Trade Commission (FTC), a cold war has been brewing among some of the largest U.S. tech companies and regulators. As tech giants continue to move forward with M&A deals, will they be in a heated battle in 2022?
Microsoft, Amazon and Google parent Alphabet announced more deals in 2021 than any year in the past decade, data compiled by financial information provider Dealogic showed. That pace of deals suggests they’re trying to get ahead of an imminent antitrust crackdown, or that they don’t trust Lena Khan and other regulators to make a strong enough case in court to block a takeover.
Alphabet’s 22 deals in 2021, Microsoft’s 56 deals and Amazon’s 29 deals are all at 10-year highs, the data showed. Although Dealogic’s data only counts publicly disclosed deal values, Alphabet and Microsoft also saw their combined deal value hit a 10-year high, at $22 billion and $25.7 billion, respectively, according to those records. Amazon’s total deal value of $15.7 billion was just shy of a 10-year high and just behind 2017 when Amazon agreed to buy Whole Foods for $13.7 billion.
Microsoft’s $69 billion acquisition of video game developer Activision Blizzard this week is the latest example of how a big tech company may be challenging regulators’ antitrust action. From 2021, tech companies have completed several big deals, including Microsoft’s $19 billion acquisition of voice technology company Nuance Communications and Amazon’s $8.5 billion acquisition of MGM Studios.
“Big tech companies are very concerned about (antitrust) and want to get deals done before the government succeeds in setting a new precedent. Once a judge sets a precedent in court, it’s easier for other judges to follow that precedent.” Erik Gordon said.
Since taking office as FTC chair last June, Lena Khan has repeatedly advised the FTC to aggressively enforce antitrust policies. She has filed an amended Facebook antitrust complaint, saying its acquisitions of Instagram and WhatsApp cement its current position as the social network monopoly.
So far, the FTC she leads is relying on a deterrence strategy to rein in corporate takeovers as the committee struggles to keep up with the historic surge in merger filings across industries. What is unclear is how far the agency is willing to live up to its threat to act on the antitrust front.