Google’s contemplated mega deal would prompt new fight with regulators

Google's contemplated mega deal would prompt new fight with regulators

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Google’s mega deal would prompt new fight with regulators

Google’s contemplated mega deal would prompt new fight with regulators: Google’s contemplation of a mega deal would likely spark renewed scrutiny and potential conflict with regulators, given the company’s already dominant position in various sectors. Here are some key points to consider:

  1. Antitrust Concerns: Google has faced ongoing antitrust scrutiny from regulators around the world due to its dominant position in online search, digital advertising, and other key markets. Any large-scale acquisition or mega deal would likely attract attention from competition authorities concerned about further consolidation of power and potential anti-competitive behavior.
  2. Market Dominance: Google’s vast ecosystem of products and services already encompasses search, advertising, cloud computing, mobile operating systems, and more. Acquiring additional companies or technologies could further solidify its market dominance and raise concerns about stifling competition and innovation in the digital economy.
  3. Data Privacy: Google’s collection and use of user data have been subject to scrutiny and regulatory action, particularly in regions with stringent data privacy laws such as the European Union. Any acquisition that involves access to sensitive user data could trigger concerns about data privacy and necessitate regulatory review to ensure compliance with relevant regulations.
  4. Political and Public Backlash: Beyond regulatory scrutiny, Google’s pursuit of a mega deal could also provoke political and public backlash, especially if perceived as further consolidating its influence and control over digital markets. Policymakers and advocacy groups may raise concerns about consumer welfare, market competition, and the broader societal implications of unchecked corporate power.
  5. Global Impact: Given Google’s global reach and influence, any mega deal contemplated by the company would have implications beyond the jurisdictions where it operates. Regulators in multiple countries would likely scrutinize the deal to assess its potential impact on competition, consumer choice, and market dynamics in their respective regions.

In summary, Google’s consideration of a mega deal would undoubtedly prompt a new round of regulatory scrutiny and potential conflicts, reflecting ongoing concerns about market concentration, data privacy, and corporate accountability in the digital age.

Google parent Alphabet’s contemplated acquisition of marketing software company Hubspot would likely spark opposition from regulators even as many experts agree it would not curb competition, and would require the technology giant to open a new front in its battle with antitrust watchdogs.

Reuters reported last week that Google was mulling an offer for Hubspot, which has a market value of $34 billion. Google has been weighing the antitrust risks of a potential deal and has yet to decide if it will make an offer.

Nearly a dozen antitrust experts and industry analysts said in interviews and analyst notes that it was unlikely that an acquisition by Google would hamper competition.

They said this is because the so-called customer relationship management (CRM) software sector in which Hubspot operates is already served by several major players, including Salesforce, Adobe, Microsoft and Oracle. Google does not compete in CRM, and the acquisition could make Hubspot a more formidable player thanks to Google’s cloud-computing resources, improving offerings and prices for customers, they added.

According to technology researcher Gartner, Hubspot, which focuses on smaller customers, had a 4.9 per cent market share in 2022 in the CRM marketing software industry, while Salesforce and Adobe each held a 15 per cent share.

Yet these experts also said it is very likely that a Google deal for Hubspot would trigger challenges from US and European antitrust regulators, given their growing aversion to technology giants getting bigger through acquisitions.

Arguing for the merits

They added that Google would have to be willing to argue for the merits of the deal in a long court battle, and would need to convince Hubspot to do the same.

“My initial reaction is such a deal would face a pretty tough reception from the antitrust regulators,” said Seth Bloom, a former general counsel of the U.S. Senate antitrust subcommittee who now runs his own advisory firm.

Google and Hubspot did not respond to requests for comment.

Google already faces several antitrust challenges, including two lawsuits from the United States Department of Justice. One accuses it of abusing its position as online search leader, while the other alleges it is monopolizing the market for digital advertising.

A Department of Justice spokesperson did not immediately respond to a request for comment.

The regulatory terrain for Google is also hostile in Europe. It is among technology firms probed by the European Union for potential breaches of the new Digital Markets Act, a directive that makes it easier for people to move between competing online services like social media platforms, internet browsers and app stores.

“This transaction has not been formally notified to the Commission. If a transaction constitutes a concentration and has an EU dimension, it is always up to the companies to notify it to the Commission,” said a spokesperson for the European Commission, the EU’S executive arm, which has fined Google in the past for anticompetitive practices in online search.

Cash pile

The intensity of the antitrust scrutiny has dissuaded most technology giants from pursuing mega deals. The last major acquisition completed was Microsoft’s $69 billion deal to buy “Call of Duty” maker Activision Blizzard, which the maker of the Xbox console managed to get past Britain’s regulators only after it agreed to give up streaming rights for Activision’s games.

In December, Adobe shelved its $20 billion deal for cloudbased designer platform Figma, citing “no clear path” for antitrust approvals in Europe and Britain. The regulators fretted about the ability of Figma’s smaller rivals to compete.

Prior to its Hubspot deliberations, Google had steered clear of large acquisitions. Its biggestever deal, the purchase of Motorola Mobility for $12.5 billion, came more than a decade ago. It has kept its dealmaking small, showing an affinity toward acquisitions in advertising with purchases such as Doubleclick and Admob.

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