Biden Tightens Grip on Big Tech... 22 Antitrust Regulations "Record High" (Comprehensive)

[Asia Economy Reporter Yujin Cho] Amid the risk of the largest-ever merger and acquisition (M&A) in the industry, Microsoft (MS)'s acquisition of Activision Blizzard being blocked by U.S. antitrust authorities, it has been revealed that the Biden administration has set a record high for antitrust regulatory actions. This is the result of intensified regulatory moves by competition authorities to curb big tech's attempts to eliminate competitors through M&As. As U.S. competition authorities have increased regulatory pressure on big tech companies that have grown excessively during the COVID-19 pandemic, the M&A market is facing unprecedented challenges.

◇ 22 Regulatory Actions... The Largest Since Standard Oil = According to major foreign media on the 27th (local time), the Biden administration has intervened in a total of 22 corporate mergers and acquisitions since taking office, of which 15 deals ultimately failed to close. This number exceeds the first two years of both the previous Barack Obama and Donald Trump administrations, and is double the number during the Trump administration, which pursued pro-business policies.

Experts evaluate this as an unprecedented measure since 1911, when the giant oil company Standard Oil was broken up into 34 subsidiaries for violating antitrust laws. Joel Grossberg, an antitrust specialist lawyer at the Chicago-based multinational law firm McDermott Will & Emery, said, "Among antitrust lawsuits over the past 25 years, this year involves more M&A cases than ever before."

The amount of penalties due to contract cancellations caused by regulatory blocks reached $22.6 billion (approximately 29 trillion KRW). This accounts for about 4.6% of the total transaction value and is the highest record in the past 10 years since 2013 during the Obama administration.

◇ Big Tech Under Crossfire... Aggressive U.S. Regulation = The U.S., which had taken a defensive stance on big tech regulation, has launched full-scale regulatory moves under the Biden administration by dividing supervisory authority over big tech between the Department of Justice and the Federal Trade Commission (FTC). The reason was that big tech companies have exercised monopolistic influence across the digital economy during the COVID-19 pandemic.

Since its inauguration in January 2021, the Biden administration has targeted big tech with aggressive legal applications to promote market competition. It appointed Lina Khan, a strong big tech regulator and associate professor at Columbia Law School, as the head of the FTC, which had been a "paper tiger." It also appointed Tim Wu, who advocates for breaking up big tech companies, as the White House National Economic Council’s Special Advisor for Technology and Competition Policy, and Jonathan Kanter, known as the "Google executioner," as the head of the DOJ Antitrust Division, forming a three-pronged team. Some have raised the possibility of ultra-strong measures such as corporate breakup lawsuits or legislation to reduce business scope, similar to the past breakup of AT&T.

The first antitrust lawsuit under the Biden administration was filed in May when the Washington D.C. prosecutor sued Amazon for antitrust violations. Recently, MS's acquisition of Blizzard, considered the largest M&A in the IT industry, has faced an ultra-strong measure in the form of an FTC antitrust lawsuit filed on the 8th, making the deal's completion uncertain. According to the Wall Street Journal (WSJ), MS has refused to propose remedies to resolve the antitrust lawsuit filed by regulators and has instead filed objections, escalating the conflict into a full-scale confrontation.

Since MS's decision to acquire Blizzard is aimed at securing a monopolistic market position, relinquishing that position would mean canceling the acquisition contract. Carrie Kochman, Co-Head of Global M&A at Citigroup, said, "It is expected to take quite a long time before a decision is made on whether this deal will be approved."

Meanwhile, antitrust legislation aimed at curbing big tech's monopolistic 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 aimed at exercising dominant power in specific markets or eliminating competitors. The "21st Century Antitrust Act," introduced by Senator Josh Hawley, prohibits companies with a market capitalization exceeding $100 billion from acquiring competitors. If this bill passes, the five major U.S. big tech companies will be fundamentally banned from acquiring other companies.

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