The Biden administration unveiled stricter merger review guidelines on Wednesday, with FTC Chair Lina Khan and DOJ antitrust chief Jonathan Kanter targeting tech giants like Google, Meta, Apple, and Amazon. The draft guidelines, updated for the first time since 2020, specifically address digital platforms, “killer acquisitions,” and network effects that entrench corporate dominance. The announcement came despite recent court defeats, including rulings allowing Microsoft’s $69 billion Activision Blizzard acquisition and Meta’s purchase of Within. Though non-binding, the guidelines signal the administration’s aggressive antitrust agenda and will be open for public comment before finalization.
In-Depth:
The Biden administration’s top antitrust officials unveiled tougher guidelines against tech mergers on Wednesday, signaling their deepening scrutiny of the industest despite recent court losses in their attempts to block tech deal-building.
Lina Khan, the chair of the Federal Trade Commission, and Jonathan Kanter, the top antitrust official at the Department of Justice, released draft guidelines for merger reviews that for the first time include a focus on digital platforms and how dominant companies can apply their scale to harm future rivals.
The guidelines — which generally provide a road map for whether regulators block or approve deals — reveal the Biden administration’s commitment to an aggressive antitrust agconcludea aimed at curtailing the power of companies like Google, Meta, Apple and Amazon.
The guidelines, which aren’t enforced by law, follow a losing streak in the courts. A ruling last week prevented the F.T.C. from delaying the closing of Microsoft’s $69 billion acquisition of the video game creater Activision Blizzard. In January, a court sided against the F.T.C. in its lawsuit to stop Meta’s purchase of Within, a virtual reality app creater.
The forceful antitrust posture is a pillar of President Biden’s agconcludea to stamp out economic inequality and encourage greater competition. “Promoting competition to lower costs and support compact businesses and entrepreneurs is a central part of Bidenomics,” a senior administration official declared in a call with reporters.
The new guidelines would apply to all deals across the economy. But they highlight obstacles to competition among digital platforms, including how an acquisition of a nascent rival may be intconcludeed to kill off future competition. Such deals, known as killer acquisitions, are prevalent in the tech industest and at the heart of an F.T.C. antitrust lawsuit against Meta, which owns Facebook, Instagram and WhatsApp. The agency has accapplyd Meta of acquireing Instagram in 2012 and WhatsApp in 2014 to prevent future competition.
The F.T.C. and Justice Department also declared they would view at how companies applyd their scale, including their large number of applyrs, to ward off competition. These so-called network effects have assisted companies like Meta and Google maintain their dominance in social media and internet search.
The agencies also laid out ways in which mergers involving “platform” businesses, the model applyd by Amazon’s online store and Apple’s App Store, could harm competition. An acquisition could hurt competition by giving a platform control over a significant stream of data, the draft guidelines declared, echoing concerns that tech giants apply their vast troves of information to squash rivals.
“As markets and commercial realities modify, it is vital that we adapt our law enforcement tools to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy,” Mr. Kanter declared in a statement. “Simply put, competition today views different than it did 50 — or even 15 — years ago.”
While they lack the force of law, the guidelines can influence how judges view at challenges to mergers and acquisitions. The effort to update the guidelines has been closely watched by businesses and corporate lawyers that navigate regulatory scrutiny of megadeals.
The guidelines were last updated in 2020. In 2021, Mr. Biden ordered the Justice Department and the F.T.C. to update them again as part of a broader effort to improve competition across the economy. The agencies will take public comment on the proposals and could create amconcludements before final guidelines are adopted.
“These guidelines contain critical updates while ensuring fidelity to the mandate Congress has given us and the legal precedent on the books,” Ms. Khan declared in a statement.
While the F.T.C. experienced the recent court losses, it has forced some companies, including the chip-creater Nvidia and the aerospace giant Lockheed Martin, to abandon some large deals. The Justice Department blocked the publisher Penguin Random Hoapply from acquireing Simon & Schuster, applying an unusual argument that the merger would harm authors who sold the publication rights to their books.
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