Crackdown on Big Tech... US Antitrust Regulation Cases Reach "All-Time High"

15 Out of 22 Regulatory Halts Resulted in Transaction Failures

[Asia Economy Reporter Yujin Cho] As Microsoft (MS)'s acquisition of Activision Blizzard, regarded as the largest merger and acquisition (M&A) in industry history, faces potential collapse due to intervention by U.S. antitrust authorities, it has been revealed that the Biden administration has set a record for the highest number of antitrust regulatory actions this year. This is the result of intensified regulatory moves by competition authorities to curb big tech's attempts to eliminate competitors through M&A. U.S. competition authorities have increased regulatory pressure on big tech, which has grown excessively large during the COVID-19 pandemic, leading to unprecedented challenges in the M&A market.

According to major foreign media on the 27th (local time), 22 M&A deals pursued by big corporations including big tech have faced the risk of collapse due to intervention by competition authorities this year. This number exceeds those during the first two years of the previous administrations of Barack Obama and Donald Trump, and is double the amount compared to the Trump administration, which pursued pro-business policies. Among these 22 cases, 15 deals were actually canceled due to regulatory intervention.

Experts have described this as the largest scale of M&A regulatory attempts since Standard Oil was broken up into 34 subsidiaries in 1911 for violating antitrust laws. Joel Grossberg, an antitrust specialist lawyer at McDermott Will & Emery, a multinational law firm headquartered in Chicago, said, "Among my 25 years of experience in antitrust litigation, this year involves the most M&A litigation cases," adding, "The number of M&A interventions by competition authorities is expected to set an all-time record since official statistics began."

With the increase in deal cancellations due to strengthened regulations, breakup fees this year reached $22.6 billion (approximately 29 trillion KRW). This accounts for about 4.6% of the total transaction value and is the highest in the past decade since 2013 during the Obama administration.

Previously defensive on big tech regulation, the U.S. has, under the Biden administration, divided supervisory authority over big tech between the Department of Justice and the FTC, officially launching regulatory efforts. The rapid growth of the digital market during the COVID-19 pandemic caused these companies to become excessively large in a short period, which was the reason for this move.

Since its inauguration in January 2021, the Biden administration has targeted big tech aggressively with legal measures to promote market competition. After appointing Lina Khan, a 'strong big tech regulator' and associate professor at Columbia Law School, as chair of the FTC?a position previously considered a paper tiger?the administration formed a three-pronged team by appointing Tim Wu, an advocate for big tech breakups, as the White House National Economic Council’s Special Advisor for Technology and Competition Policy, and Jonathan Kanter, known as the 'Google executioner,' as head of the DOJ Antitrust Division. Some have suggested that ultra-strong measures such as corporate breakups or legislation to reduce business scope, reminiscent of the past AT&T breakup case, may be forthcoming.

Amazon's antitrust lawsuit filed by the Washington DC prosecutor's office in May became the first antitrust case under the Biden administration. Currently, MS's acquisition of Blizzard, considered the largest M&A in the IT industry, is also facing uncertainty after the FTC filed a strong antitrust lawsuit on the 8th.

The Wall Street Journal (WSJ) reported that MS is escalating the conflict into a full-scale confrontation by refusing to propose remedies to resolve the antitrust lawsuit filed by regulators and instead filing objections. Since MS's decision to acquire Blizzard aims to secure a monopolistic market position, relinquishing that position would mean canceling the acquisition agreement. Cary Kochman, Global Co-Head of M&A at Citigroup, said, "It is expected to take quite a long time to reach a conclusion on whether this deal will be approved."

Meanwhile, antitrust legislation aimed at curbing big tech's monopoly power is being pursued simultaneously in the political arena. The antitrust package bill passed by the U.S. House of Representatives prohibits big tech platforms operated by Google, Apple, Amazon, Meta, MS, and others from favoring their own services. Legislation is also underway to block M&A attempts that exercise dominant power in specific markets or aim to eliminate competitors. The '21st Century Antitrust Act' proposed by Senator Josh Hawley bans companies with a market capitalization exceeding $100 billion from acquiring competitors. If passed, this law would fundamentally prohibit the five major U.S. big tech companies from acquiring other companies.

This content was produced with the assistance of AI translation services.