Tech Antitrust: FTC and DOJ Scrutiny of TMT Deals

Introduction

Antitrust enforcement has transformed from a background regulatory consideration to the primary strategic variable in TMT M&A planning. A decade ago, most TMT transactions received routine regulatory clearance within 30-60 days. Today, major technology acquisitions face extended second-request investigations that can last 12-18 months, politically charged enforcement decisions, and the real possibility of being blocked or abandoned under regulatory pressure. The combination of increased enforcement activity, novel legal theories targeting "killer acquisitions" and vertical integration, bipartisan interest in constraining Big Tech market power, and a more assertive international regulatory environment (the EU's Digital Markets Act, the UK's CMA asserting independent jurisdiction, and Chinese SAMR exercising geopolitical leverage over semiconductor transactions) has created an environment where antitrust risk assessment is not a legal afterthought but a core component of deal strategy that directly affects valuation, buyer selection, and transaction structure. For TMT investment bankers, understanding the regulatory landscape is essential for advising clients on which deals are achievable, how to structure transactions to minimize antitrust risk, how to negotiate reverse termination fees that protect sellers, and how long the regulatory process will take (which directly affects deal certainty and valuation).

The regulatory environment for TMT M&A has undergone a significant shift with the transition from the Biden-era FTC and DOJ (which pursued aggressive enforcement under Chair Lina Khan and AAG Jonathan Kanter) to the Trump-era leadership (FTC Chairman Andrew Ferguson and DOJ AAG Gail Slater). The overall posture has moved from aggressive broad scrutiny to more targeted and selective enforcement, though Big Tech remains a stated top priority for both agencies.

The Dual Review System: DOJ and FTC

In the US, antitrust review of mergers and acquisitions is conducted by two agencies: the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC). For any transaction exceeding the Hart-Scott-Rodino (HSR) reporting threshold (approximately $119.5 million in 2025), both parties must file a premerger notification and observe a waiting period before closing. The agencies divide enforcement responsibility informally by sector: the DOJ typically reviews telecom and media deals, while the FTC typically handles semiconductor and some software transactions, though jurisdiction is allocated on a case-by-case basis. If either agency identifies potential competitive concerns during the initial review period, it issues a "second request" for additional information, which extends the review timeline by 6-18 months and requires the parties to produce extensive internal documents. Approximately 3-5% of reported transactions receive second requests, but the rate is significantly higher for TMT deals involving Big Tech acquirers or transactions in concentrated markets like semiconductors, social media, and enterprise software.

The current administration has signaled several important shifts. First, there is greater reliance on established theories of harm (horizontal mergers between direct competitors with leading market positions) rather than the novel vertical and conglomerate theories that characterized the previous administration. Second, enforcement agencies have embraced settlements with remedies as a preferred tool for resolving concerns, rather than seeking to block transactions outright. The DOJ's handling of the HPE/Juniper Networks deal illustrates this shift: after initially filing a lawsuit to block the $14 billion acquisition in January 2025, the DOJ settled with conditions on June 27, 2025, allowing the deal to close. Third, AI and national security have emerged as major priority areas, with the White House releasing America's AI Action Plan in July 2025 and enforcement agencies paying particular attention to AI-related concentration and the competitive implications of large-scale AI infrastructure investments by dominant technology platforms.

Several ongoing and recently resolved enforcement actions have direct implications for TMT M&A strategy.

The FTC's ongoing litigation against Amazon alleges monopolization of online superstore and marketplace services, with potential remedies that could affect Amazon's marketplace platform and fulfillment operations. The FTC's scrutiny of Meta's historical acquisitions of Instagram and WhatsApp represents the "killer acquisition" theory: the idea that dominant platforms acquire potential competitors to eliminate competitive threats rather than to achieve legitimate synergies. Both of these cases, if successful, could establish precedents that significantly constrain future acquisition strategies by dominant platforms. Google also lost key portions of the Epic Games app store litigation, with courts determining that aspects of its Play Store policies were unlawfully exclusionary.

Apple faces its own antitrust challenges: the DOJ filed a comprehensive antitrust lawsuit against Apple in March 2024, alleging that Apple maintains an illegal smartphone monopoly through anticompetitive practices including restricting alternative app distribution, limiting cross-platform messaging interoperability, and constraining digital wallet competition. The outcome of the Apple case could reshape the mobile ecosystem's competitive dynamics and affect how platform companies structure their product strategies and acquisition programs. Each of these cases creates precedents that shape the risk assessment for future TMT transactions, and TMT bankers must monitor their progress because remedy outcomes in one case often establish the framework that agencies apply to subsequent deal reviews.

TMT transactions face parallel review in multiple jurisdictions, each with its own enforcement priorities and timelines. The European Commission, UK Competition and Markets Authority (CMA), and Chinese SAMR all exercise jurisdiction over transactions meeting their respective filing thresholds, creating a multi-front regulatory challenge.

European enforcers have adopted discretionary call-in powers that enable review of transactions below standard reporting thresholds, specifically targeting "killer acquisitions" where a dominant platform acquires a small but potentially disruptive competitor at a price below the HSR threshold. This development means that even small TMT acquisitions by Big Tech companies may face regulatory scrutiny that would not apply to the same transaction by a non-dominant acquirer.

The EU's Digital Markets Act imposes specific obligations on designated gatekeepers (Alphabet, Amazon, Apple, Meta, Microsoft, and ByteDance) that go beyond traditional merger control. Gatekeepers must notify the European Commission of all acquisitions, regardless of size, giving regulators visibility into every deal a major platform makes. The DMA also prohibits certain self-preferencing behaviors that could affect the post-acquisition integration of acquired businesses. For TMT bankers advising European or cross-border transactions, the DMA creates an additional layer of regulatory complexity that must be navigated alongside traditional merger control.

The UK's CMA has established itself as one of the most aggressive technology regulators globally, with a willingness to reach different conclusions than US and EU counterparts. The CMA's initial decision to block the Microsoft/Activision deal (before reversing course after modified commitments) demonstrated its independence and its willingness to challenge transactions that other regulators had approved. The CMA's Digital Markets, Competition and Consumers Act (DMCCA), which took effect in January 2025, gives the CMA new powers to designate companies with "strategic market status" and impose conduct requirements and merger reporting obligations. For large TMT transactions, the CMA is now a "must-clear" regulator alongside the EU and US, adding to deal timeline and complexity.

AI-related antitrust scrutiny represents the newest and fastest-evolving dimension of technology enforcement. Regulators are examining multiple potential theories of harm specific to AI.

Antitrust risk has fundamentally changed how TMT M&A transactions are structured, negotiated, and executed.

Buyer selection is now influenced by regulatory risk. Sellers and their bankers evaluate not just price and strategic fit but also the likelihood of regulatory clearance. A strategic acquirer offering a 20% premium but facing an 18-month regulatory timeline and 30% blocking risk may be less attractive than a PE sponsor offering 10% less but with regulatory certainty. Competitive processes increasingly include "regulatory risk discounting" where the seller's board adjusts bid values for the probability-weighted impact of regulatory delay or failure. This discounting has practical consequences: in multiple recent TMT auctions, the winning bidder was not the highest bidder but the bidder with the highest probability-adjusted value after accounting for regulatory risk. TMT bankers who can credibly assess regulatory clearance probability for different buyer combinations provide significant advisory value in this environment.

Reverse termination fees (break fees payable by the buyer if the deal fails due to regulatory denial) have increased significantly in TMT transactions, typically ranging from 3-8% of deal value. The Microsoft/Activision deal included a $3 billion reverse termination fee, and subsequent large TMT transactions have set fees at similar levels. These fees protect sellers against the opportunity cost of a failed transaction and incentivize buyers to aggressively pursue regulatory clearance.

Deal structure can be designed to minimize antitrust risk. Divestitures of overlapping business lines can be offered proactively ("fix-it-first" remedies) to eliminate competitive concerns before filing. Licensing commitments and behavioral remedies (such as Broadcom's commitments regarding VMware product availability) can address vertical concerns. In some cases, structuring a transaction as a licensing or partnership arrangement rather than a full acquisition can achieve the strategic objective without triggering antitrust review. The trend toward remedy-based resolutions under the current administration has expanded the toolkit available to deal structurers: behavioral commitments (interoperability requirements, non-discrimination obligations, data portability provisions) are increasingly accepted alongside traditional structural remedies (divestitures), giving creative TMT bankers more options for addressing regulatory concerns without fundamentally altering the deal thesis.

Timeline management is critical because extended regulatory review creates deal risk. During a 12-18 month review period, the target's competitive position may shift, key employees may depart due to uncertainty, customers may delay purchasing decisions, and market conditions may change significantly. TMT bankers build regulatory timeline assumptions into the deal model and advise clients on the financial implications of delay, including interim operating covenants that restrict the target's ability to make strategic decisions, financing commitment expirations that may require costly extensions, stock price volatility that affects the effective consideration in stock-for-stock transactions, and the opportunity cost of management distraction during the review period.

Ticking fees (daily payments from buyer to seller during extended regulatory review periods) have become more common in TMT transactions to compensate sellers for the time value of deal uncertainty. The HPE/Juniper and Microsoft/Activision transactions both included provisions to address regulatory delay costs, and TMT bankers increasingly negotiate these terms as standard deal components for transactions expected to face extended review.

Antitrust counsel selection is itself a strategic decision that affects deal outcomes. The major antitrust practices (Cravath, Wachtell, Sullivan & Cromwell, Davis Polk on the defense side; the DOJ and FTC retain significant in-house expertise) have established relationships with enforcement agencies and track records in specific transaction types. TMT bankers coordinate closely with antitrust counsel from the earliest stages of deal planning, often engaging them during pre-announcement strategic planning to assess clearance probability before the transaction is publicly announced.

Private equity firms face their own set of antitrust considerations in TMT that differ from strategic acquirers. Serial acquisitions (roll-up strategies where a PE-backed platform acquires multiple companies in the same market) have attracted increasing regulatory attention, with both the DOJ and FTC examining whether individual acquisitions that would not independently raise concerns might collectively create market concentration when viewed as part of a pattern. IT services roll-ups and software platform strategies are particularly exposed to this theory.

Additionally, interlocking directorates (where PE fund partners sit on the boards of multiple portfolio companies that compete in the same market) create antitrust risk under Section 8 of the Clayton Act. The FTC has brought enforcement actions against PE-backed board overlaps, requiring resignations from boards of competing portfolio companies. For TMT bankers advising PE clients, screening for portfolio company competitive overlaps is now a standard element of pre-acquisition antitrust due diligence. Major PE firms have responded by hiring dedicated antitrust counsel within their in-house legal teams and building compliance programs that monitor portfolio company competitive interactions.

The PE industry's increasing use of "club deals" (where multiple sponsors co-invest in a single transaction) also presents antitrust questions. The $55 billion EA take-private, backed by a sovereign wealth and PE consortium, represents the type of multi-sponsor transaction that regulators may examine for coordination effects, particularly if the consortium partners have competing portfolio investments in the gaming or broader media and entertainment sector. Managing these cross-fund competitive dynamics adds complexity to TMT consortium transactions.