Restraining Strategic Tech Acquisitions in the EU

June 18, 2021

Anti-big-tech or anti-American? Is there a difference? The Macau News Agency reports, “Germany, France Want to Curb ‘Killer’ Big Tech Deals.” Left out of the headline is the Netherlands, which joins those larger powers in their desire to stop companies like Facebook, Google, and Amazon from making “killer acquisitions.” These are deals in which tech giants snap up budding startups before they can bloom into competitors. We learn:

“EU regulators believe that Facebook’s buyouts of Instagram or WhatsApp, or Google’s purchase of Fitbit, are potential examples of big companies buying out a high-potential startup before it developed into a rival. The EU ministers were discussing the Digital Markets Act, a law being hammered out at European Parliament and among the 27 member states that will take years to come into force. It would create a list of special rules for the handful of big technology companies on how they can operate, including stricter obligations on informing regulators of their buyouts and mergers. At the meeting, EU competition chief Margrethe Vestager insisted that existing rules already offered ways to intervene quickly against such buyouts when they are notified by national authorities. This was the case most recently with Facebook’s acquisition of software provider Kustomer even though that deal is below the EU’s thresholds for notification. The ministers also discussed the Digital Services Act that could force Big Tech into providing more transparency on algorithms and better policing of illegal content.”

The EU currently abides by the country-of-origin principle, wherein the country in which a company’s European operation is based handles enforcement. However, since it feels Ireland bungled the oversight of big tech firms, France suggests the EU re-evaluate that principle. The specific rules it will propose remain to be seen.

Cynthia Murrell, June 18, 2021

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