Yahoo Finance Biden has a new message for Big Tech: Think twice about any future mergers
The Biden administration's guidelines could affect future mergers for Amazon and Google.
The Biden administration announced new guidelines Wednesday intended to send a message to the business world that Washington’s merger watchdogs will be even more critical of corporate consolidation in the years ahead.
The proposed rules span the entire economy, but the 51-page proposal included a special warning for Big Tech.
Officials outlined 13 guidelines that could be in place as early as the fall and will be used in the years ahead to determine if a deal is lawful. No. 10 on the list is a set of new standards around any so-called "multi-sided platform," Washington-speak for firms like Amazon (AMZN), Alphabet (GOOG), and others.
The new guidelines come from both the Department of Justice and the Federal Trade Commission (FTC). FTC Chair Lina Khan said in a statement that "we are updating our enforcement manual to reflect the realities of how firms do business in the modern economy."
While the move isn’t seen as likely to impact mergers in the works — notably the ongoing saga around Microsoft's (MSFT) $69 billion deal to acquire "Call of Duty" developer Activision Blizzard (ATVI) — it immediately drew praise from tech critics like Sen. Elizabeth Warren (D-Mass.).
Lisa Gilbert, the executive vice president of the consumer advocacy group Public Citizen, added in an interview that these new rules could mean "it’s going to be hard for a big company or really any company not to look at this and think twice" as they are mulling future deals.
‘It flavors the environment going forward’
The new proposed guidelines are a revision of government merger guidelines that were first introduced in 1968 and have been updated every few years since.
The chapter on platforms lays out different types of competition that regulators will now be more aggressive in preserving when assessing future deals, including both competition within a platform as well as competition between platforms.
A senior administration official said any mergers that impact how consumers use platforms will be under the microscope. If a merger could deprive rivals of scale, that’s also "something that would be relevant to us."
The official added that the overall aim of the new guidelines is to present "a more nuanced, on-the-ground view of the different ways in which illegal mergers can hurt people."
Biden officials have of course long been critical of Big Tech’s business practices around platforms. Before coming to Washington, Chair Khan rose to prominence with academic work focused on why Amazon should be contained, and she has taken actions against the company since being confirmed in 2021.
Representatives for Amazon and Alphabet didn’t immediately respond to a request for comment on how the proposed new rules could impact their plans, but one thing that is clear is that the rules are unlikely to impact mergers already well down the road of the government review process.
The proposed rules are first subject to a public comment period of 60 days before any changes take effect. The guidelines also don’t constitute any new law but rather represent how Biden officials interpret existing law.
President Biden had called for these new rules in 2021 and said they should aim to forestall "more bad mergers that lead to mass layoffs, higher prices, fewer options for workers, and consumers alike."
On the Microsoft and Activision deal, an appeals court has already stepped in to deny the FTC’s efforts to slow down the deal with most of the remaining questions around that deal swirling around the UK's Competition and Markets Authority ongoing review of the proposal.
It's unclear what role the FTC will have, if any, between now and a new deadline of Oct. 18.
Gilbert acknowledges this week's move is unlikely to impact Microsoft this time, but she says she hopes "it flavors the environment going forward."
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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