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Washington regulator aims for more control over Microsoft and Meta

If the FTC can pull off a victory in either proceeding — though there’s likely a long way to go before either reaches that point — Khan and his team would do more. that simply blocking these deals would arm themselves with broad investigative authority over future acquisitions at Meta and Microsoft. For two tech giants who have built some of their most successful businesses around corporate buyouts, this would be a radically new regulatory process compared to how they’ve done business in the past. .

As it stands, current law requires companies to notify the FTC and Justice Department when a deal is valued over $101 million, and agencies have a narrow 30-day window. to decide whether or not to open an in-depth investigation.

But the FTC could mandate reviews of their deals and remove any limitations on deal size. At the same time, Khan wants to broaden the scope of potential deals that can be vetted through the process — called “prior approval” in the antitrust world.

Previously, the FTC often included similar review requirements as standard language in complaints filed in its domestic court. But the agency has generally limited these additional review requirements to future mergers in markets affected by a particular lawsuit.

Khan wants to revisit those boundaries, giving his agency a much broader investigative mandate.

In Microsoft’s case, that not only means the companies could face the heaviest scrutiny in future gaming deals, but also potentially “in business activities and related markets.” The FTC doesn’t define what that means, but given the focus on cloud gaming in the case, it could, for example, encompass any deal involving Microsoft’s Azure cloud business. The exact scope of a pre-approval requirement would be up to a federal judge.

In fact, just a day after the FTC filed its lawsuit, Microsoft announced the acquisition of Lumenisity, which manufactures high-speed data cables that “will expand Microsoft’s ability to further optimize its global cloud infrastructure.” . The purchase price was not disclosed, but it’s the type of deal the FTC could subject to further scrutiny under a preapproval provision.

A Microsoft spokesperson declined to comment on the outcome of the FTC case or whether US regulatory approval is currently required for the Lumenisity deal.

The widespread use of pre-approval bypasses the modern merger review process, implemented in the 1970s under the Hart-Scott-Rodino Act, said Bona Law attorney Steve Cernak, whose practice is partly focused on merger reviews. “This is a significant change in the FTC’s process for reviewing transactions.”

Identical language is also used in the FTC v. Meta case. A broad interpretation of “business activity and markets” related to virtual reality applications could encompass just about any future deal the company hopes to strike.

Spokespersons for Meta and the FTC declined to comment.

None of this should come as a surprise to companies, however, with Khan outlining the plan in a policy statement last year.

However, the FTC is still far from getting what it wants, in particular in the Microsoft case, which it has just filed before its internal administrative tribunal. Yet even if they win, the agency still has to convince a federal judge to block the deal.

politico Gt

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