Federal Trade Commission Chairwoman Lina Khan and Assistant Attorney General Jonathan Cantor of the Department of Justice’s Antitrust Division participate in a discussion on antitrust reform at the Brookings Institution in Washington on October 4, 2023. Khan was appointed by U.S. President Joe Biden and confirmed by the Senate, and took office as FTC Chair in June 2021.
Drew Ungerer | Getty Images
Google The company was in negotiations to acquire a marketing software maker. HubSpot Earlier this year, the company tried to acquire cybersecurity startup Wiz, but the deal fell through. That also didn’t happen.
Google has taken a different strategy in closing some notable deals recently. Amazon and Microsoft Last month, Google announced it was hiring the founder of generative AI startup Character.AI to bring in artificial intelligence experts. Rather than buying outright and shutting down Character, which is a standard acquisition tactic, Google is keeping the startup afloat and licensing its technology.
This is the new world of tech M&A. Under the Biden administration, and especially under Federal Trade Commission Chairwoman Lina Khan, larger companies are being prevented from pursuing big deals and, in some cases, walking away from smaller ones. Amazon in January abandoned its $1.7 billion acquisition of iRobot after the FTC and European regulators raised concerns.
Tech deal volume has plummeted since peaking at $1.5 trillion in 2021, dropping to $544 billion last year, according to Dealogic. As of 2024, that figure is $465 billion.
In the technology sector, private equity buyers are propping up the market. Black Rock Two months after Permira said it would buy website-building platform Squarespace for roughly $7 billion, it agreed to buy data provider Preqin for $3.2 billion. In July, big tech buyout firm Thoma Bravo said it was selling Instructure to KKR for $4.8 billion.
We do not expect any major changes for the rest of the year. With the presidential elections coming up in November, there may be significant changes to the regulatory environment and the removal of trade barriers.
But neither party has taken a clear view on what the future holds. Senator J.D. Vance, the Republican nominee and Donald Trump’s running mate, has praised Khan’s tough merger rules, telling CNBC last week that “there should be an antitrust solution” to some of the behavior of the big tech platforms.
On the Democratic side, billionaire donors Barry Diller and Reid Hoffman have expressed concern about whether Khan would be able to keep his job if Vice President Kamala Harris wins.
“I think even if Trump wins, the regulatory environment is still going to be pretty tough, and a tough regulatory environment just limits big deals,” said Andrew Lu, a partner at law firm Gunderson Dettmer who represents startups in mergers and acquisitions.
The Biden administration’s crackdown on Big Tech goes far beyond curbing M&A.
Alphabet is in the midst of its second antitrust trial after the Department of Justice accused the company of monopolizing search and advertising practices. apple The FTC filed a lawsuit in March alleging antitrust violations. Meta And Amazon.
Add to this the equally challenging environment in Europe and a no-deal deal doesn’t seem safe. Adobe The company backed out of a $20 billion deal to acquire design software startup Figma and paid a $1 billion penalty, saying in a statement that there was “no clear path to receiving the necessary regulatory approvals from the European Commission and the UK Competition and Markets Authority.”
Figma announced in July that it had completed a tender offer at a valuation of $12.5 billion. The design software startup is seen as a strong contender when the IPO market reopens. But initial public offerings are also in a prolonged drought as companies continue to grapple with the steep decline in their valuations caused by the economic slowdown that began in 2022, in addition to a steep decline in the M&A market.
A Figma spokesperson declined to comment on the company’s plans.
Dana Rao, who served as Adobe’s general counsel at the time, announced his departure earlier this month after 12 years at the company. In an interview in December, Rao said Adobe executives felt justified in acquiring Figma following the failure of a competing product-design program. But regulators saw it differently.
“We’ve had a lot of interactions with regulators and they’re very focused on the new antitrust principles that make future competition a critical part of the antitrust analysis,” he said.
Jonathan Cantor, head of the Justice Department’s antitrust division, said in a statement after Adobe backed down that the move “ensures that designers, creators, and consumers can continue to benefit from competition between our two companies.”
“Very disciplined”
Trading continues to take place away from regulatory oversight.
Hewlett Packard Enterprise In January, it agreed to acquire the network hardware company. Juniper $14 billion. And this month, Salesforce The company announced it would acquire startup Own for $1.9 billion.
In these cases, management was less concerned with regulators and more focused on how shareholders would react due to their increased focus on profitability after the 2022 recession.
Antonio Neri, president and CEO of Hewlett Packard Enterprise, gave a speech at Mobile World Congress (MWC), the telecommunications industry’s largest annual conference, held in Barcelona on February 27, 2024.
Pau Ballena | AFP | Getty Images
HPE CEO Antonio Neri told CNBC that Juniper will grow non-GAAP revenue in its first year.
“We are very disciplined in the return on our invested capital, and every dollar we spend needs to deliver value to shareholders,” Neri said in an interview. “So with Juniper, for example, we committed to a series of synergies that exceeded the capital cost of the acquisition.”
Mr. Neri told analysts in January that while the two companies operate in some of the same markets, they are in different industries and he didn’t expect a lengthy battle with regulators. In August, Britain’s Competition and Markets Authority approved the deal.
Sergio Letellier, HPE’s head of corporate development, said that when he and his team members advise Neri on a potential deal, they always discuss how regulators might treat the transaction. While some deals are taking longer to close than in the past, “the fundamental distinction between problematic and non-problematic deals remains the same,” Letellier said.
Salesforce Chief Executive Officer Marc Benioff said Own should boost free cash flow in the second year after the deal closes. It’s Benioff’s first $1 billion-plus acquisition since the cloud software vendor bought Slack for $27 billion in 2021, making it the company’s largest acquisition to date. The Justice Department’s antitrust division has asked for more information before approving the deal.
In an interview last week, Benioff described U.S. regulators as “a bit dysfunctional” but praised Europe for recognizing where competition is actually being hurt. He pointed in particular to a recent finding by the European Commission, the EU’s executive body, that Microsoft violated antitrust laws by tying Slack competitor Teams to its core Office productivity application.
“They’re actually working and they’re taking it seriously,” Benioff said, referring to the EU and Britain. “I think it’s big news that we’re following the Europeans in this regulatory environment.”
Since acquiring Slack, Salesforce has pursued only smaller deals, especially since facing off against activist investors who pressured it to refocus on profitability. Salesforce gained AI talent with its acquisition of Airkit and a Sales Cloud software add-on from Spiff.
“We’ve done over 60 acquisitions,” Benioff said. “We’ve tried a lot of M&A and failed a lot, but we’ve also had a fair few successes, especially with the larger acquisitions.” Prior to Slack, Salesforce had acquired Tableau Software and MuleSoft.
It’s hard to be confident
in CiscoDerek Idemotto, head of corporate development at a network hardware company, said one of the first questions executives ask when evaluating a potential deal is how certain it is that it will go through.
“The question is, how much regulatory risk are you willing to take given how challenging the situation is and how litigation issues could arise,” said Idemotto, who has worked on more than 100 transactions in his nearly 17 years at the firm.
Mr. Idemotto said that’s making Cisco’s recent choices tough. Before the company announced its $27 billion acquisition of data-analysis software company Splunk last September, he said he thought the risk was definitely worth taking. Splunk was outside Cisco’s core networking equipment.
“It’s definitely an offensive play for us,” Idemoto said.
The transaction progressed smoothly and closed in March, six months ahead of schedule.
“When you sign something, you have a high level of trust; that’s the Cisco way,” Idemoto said.
That level of trust will be hard for any giant to achieve as long as the FTC and DOJ remain active oversight. Alphabet’s most recent big deal was its $5.4 billion acquisition of cybersecurity company Mandiant in 2022. Microsoft completed its mega-$75 billion acquisition of Activision in October, but it took 20 months and a drawn-out battle with U.S. and European regulators. Amazon hasn’t done a deal worth more than $1 billion since completing its $3.9 billion acquisition of One Medical in early 2023.
Amazon said last month it was hiring a quarter of its employees from Covariant, a company that makes AI models for robots. It was the company’s second hire-to-buy AI deal, following a similar deal with Adept in June. Even that deal has come under an informal FTC investigation.
Amazon did not comment specifically on the matter but said acquisitions remain part of its growth strategy and are a “critical and healthy part of the innovation economy.” Microsoft and Google declined to comment.
HPE’s Letelier said tech companies considering acquisition strategies will find it hard to predict the future because it’s not clear what reforms Harris might enact if she wins the November election, or what Trump might do if he returns to the White House.
President Trump, acting on the recommendation of the Committee on Foreign Investment in the United States, has blocked several deals on national security grounds, while under President Joe Biden, regulators are filing a record number of merger enforcement actions, Bloomberg reported.
“We’re at a crossroads right now and we don’t know which direction policy will go,” Letellier said.
Watch: How big tech companies are quietly acquiring AI startups without actually buying the companies

