Top tech acquisitions are not as random as those in the mass market. Mass market acquisitions make it to the headlines because they come out of their comfort zone to buy another company or reflect its success.
On the other hand, trillion-dollar companies such as Amazon, Alphabet (parent company of Google) and Microsoft put these companies in a shopping cart for the year and bought them. At least it seems something like it.
Dealouge said Microsoft, Amazon and Alphabet announced more acquisition plans in 2021 than any other year in the past decade, which is not surprising since the companies are capable of doing so.
Here is the thing, many companies are going through anti-trust crackdowns and regulatory challenges. Chances are, the large tech companies want to acquire the smallest ones to give them a new chance at life. Otherwise, they would fall under much legislation, and the stock price would drop. As a final result, they will vanish from the marketplace.
These companies had to grind for years and invest millions and millions in coming to this point. But court cases could block their business in the long run. Under the new shade, they will have the capital to pay off debts, transparent taxation papers and run as usual. On the flip side, Microsoft, Amazon and Alphabet will gain more revenue by expanding the business portfolio to a more significant percentage.
Lina Khan, FTC chief, told CNBC that it takes courage to fight against large tech companies. She currently holds Federal Trade Commission (FTC) chair, where the largest tech companies constantly file their papers.
A congressional reckoning took place in Washington DC where lawmakers gave regulatory rulings to Facebook, Google and Twitter CEO. Rules for tech industries are getting stricter day by day. This calls for
Khan is not shy about regulations, and Facebook’s acquisition of Instagram and WhatsApp to create social media monopoly did not pass by her radar. An amended complaint has been filed against Facebook for claiming the purchases. Abusive market power is not something new. So, her tactic is surely appraisable as bringing tough calls on large tech such as Alphabet, Microsoft, Amazon and Facebook on bringing regulatory facilities.
Amazons abusive market power on eCommerce, previous cases for using customers, search data to sell more of their products are considered. These data will give more filing power to the FTC against tech giants.
Microsoft recently acquired Activision Blizzard for $69 billion, which is one of the biggest of 2022. Activision Blizzard subsections and gaming products will be sold under Microsoft, removing the competition received.
Though Activision Blizzard’s purchase made headlines in every major outlet, several deals from 2021 have been taken under strict consideration. Microsoft purchased Nuance Communions with a $19 billion deal. Along with Amazon’s deal for MGM Studios, which took place recently for about $8.5 billion. The government will lose more tax revenue without bragging rights and saying power in these acquisitions.
Alphabet, Google’s parent company made 22 deals; Amazon made 29 deals and Microsoft, far ahead with 56 deals in 2021, was at an all-time high of the last ten years. Merger filings in the acquisition industry are kept a keen eye under Khan’s command in FTC.
Undercutting or removing competitor companies is crucial, but the government may lose some of its revenue on the macro level. And it will be hard for newer companies to bring out newer products to the market.
In an interview, Khan said talked about the data monopoly and fight with big tech. Though we agree, she’s been doing a tremendous job keeping big techs in check. So that big techs do not manipulate the market with extra bargaining power. FTC thinks ‘locking in customers’ in a single platform allows companies to gather more data, which can go wrong at any moment.