Big Tech companies aren’t afraid of antitrust regulators, but they sure do dance for activist hedge funds

Salesforce CEO Marc Benioff
ason Alden/Bloomberg via Getty Images

Remember when antitrust regulators were going to put an end to Big Tech M&A?

If you’re wondering how that’s going, here’s a recent scorecard:

– In late February, Amazon closed its $3.9 billion acquisition of One Medical, a major expansion into primary health care that the retail giant felt comfortable moving ahead with despite not having the FTC’s blessing. 

– In 2022, Amazon acquired Hollywood studio MGM for $8.5 billion.

– The FTC’s attempt to block Facebook-parent Meta from acquiring a small VR fitness app crumbled in February, after a federal judge rejected the agency’s rationale for blocking the deal. 

– And, according to Reuters, Microsoft’s $69 billion acquisition of Activision is set to get approved by the European Commission, which would be a key step towards the deal’s completion. 

Big Tech is clearly still getting deals done. The big fish may not be swallowing startups with the same gusto as in past years (Google-parent Alphabet announced 34 acquisitions in 2014 compared to just 10 in 2022, according to Wikipedia’s tally), but Big Tech is not shying away from giant, transformative deals, à la Microsoft-Activision or Amazon-One Medical, out of fear that antitrust regulators will stop them.

But if Big Tech companies aren’t afraid of the antitrust police, they may be more intimidated by another powerful group: activist investors.

Witness Salesforce’s decision earlier this week to disband its M&A committee. The decision effectively puts an end, at least temporarily, to a multiyear buying binge that included the $27.7 billion acquisition of Slack, the $15.7 billion of Tableau, and the $6.5 billion of Mulesoft.

With at least five activist investors including Elliott Management and Starboard Value meddling in Salesforce’s affairs, the $187 billion company concluded that it had no choice but to acquiesce.

Of course, many Big Tech companies like Meta and Alphabet, have dual share stock structures that offer some protection against activist investors. Still, it’s hard not to see the irony in the differing outcomes achieved by activists and regulators.

If the FTC’s Lina Khan really wants to stop tech companies from doing acquisitions, she might want to call Elliot Management’s Jesse Cohn for advice.

Want to send thoughts or suggestions to Data Sheet? Drop a line here.

Alexei Oreskovic

Data Sheet’s daily news section was written and curated by Andrea Guzman. 


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From the article

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