Adobe’s dropped acquisition of Figma is the latest sign of regulatory obstacles

It’s open season on Big Tech.

Rising regulatory barriers and a torrent of lawsuits are giving tech behemoths in pursuit of mega-mergers pause and eventually could force them to reset their business practices.

The latest evidence of that came early Monday, when Adobe Inc.

called off its proposed $20 billion acquisition of design-tools maker Figma in the face of pressure from European regulators. “There is no clear path to receive the necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority,” the two companies said in a statement.

Read more: Adobe to terminate $20 billion Figma buyout because of regulatory pressure

“In Europe, a regulator like the European Commission does not have to prove its case in court. The EC is judge, jury and executioner. It has a lot of leeway,” said London-based Yuri Khodjamirian, chief investment officer for financial-services company Tema ETFs.

Stateside, pressure is also ratcheting up.

Reeling from a defeat in court after a jury found that its app store was anticompetitive, Alphabet Inc.’s


Google is girding for another possible legal loss over its business practices.

The conclusion of the Justice Department’s antitrust lawsuit for Google’s search business could bring about even more misery amid an escalating war with the federal government.

A trio of court battles head the litigation agenda: The Justice Department’s recently completed lawsuit against Google, the Federal Trade Commission’s filing against Inc.

and the antitrust lawsuit against Google by Epic Games. Last week, a federal jury trial handed a victory to Epic, which claimed the Play app store operated as an illegal monopoly. Google is appealing.

For more than 50 years, the courts have hewed to the definition of what constitutes antitrust behavior: anything that harms consumers through price gouging and limiting choice.

But with Amazon, Google and Apple offering digital marketplaces that are wildly popular with consumers, litigators have redefined what they consider monopolistic practices. Critics of Big Tech now argue that app stores and dominant technologies like Google search harm developers, especially smaller ones, that must play by the rules of tightly controlled markets, according to Alden Abbott, a former general counsel with the FTC.

“Amazon’s products and services are enormously popular with consumers,” Abbott said of the FTC lawsuit. “The Supreme Court will be very skeptical that Amazon has violated the monopolization laws” should the case end up in the nation’s highest court.

“Amazon’s algorithm hurts smaller companies. But there is a tremendous benefit to most sellers because they use the Amazon platform,” Abbott added. “Before, those sellers did not have the distribution means.”

Hamstrung by old law, but with a strategy

Antiquated antitrust laws have hamstrung the actions of federal regulators in their pursuit of cases revolving around 21st-century technology. And with Congress unlikely to pass any substantive tech laws in the foreseeable future, federal judges are unlikely to apply old antitrust law to new companies because of the very real possibility that their decisions will be overturned, according to legal experts.

What FTC Chair Lina Khan and Jonathan Kanter, assistant attorney general for the Justice Department’s antitrust division, can do is plow forward in an attempt to make legal inroads in their opposition to mega-mergers and related business practices.

Though the FTC came up short in its bid for a preliminary injunction blocking Meta Platforms Inc.’s

proposed acquisition of virtual-reality media company Within Unlimited, a federal court found that, “properly proven,” actual potential competition or perceived potential competition by an acquirer in the market in which a target operates could be the basis for viable claims of harm to competition under Section 7 of the Clayton Act.

Indeed, such interpretations in court — or the threat of legal opposition by the FTC and the Justice Department — can “scare away small and medium-size companies” from deals that require more paperwork and legal fees that can escalate into the millions, says tech attorney Abiel Garcia.

“Don’t just look at the win-loss record. The threat of federal action may deter deals and cause some companies to abandon acquisitions, legal experts say,” Garcia notes. “The FTC has made it clear that companies will face opposition seven ways to Sunday.”

Even deals that do go through, such as Microsoft Corp.’s

$69 billion purchase of Activision Blizzard Inc., require concessions, undercutting the upside of potential business markets.

The software giant, which was ensnared in an antitrust saga with the Justice Department in the 1990s and early 2000s, made several compromises to get the Activision Blizzard deal approved. It agreed to offer ongoing access to “Call of Duty,” one of Activision’s flagship games, on digital platforms from other companies such as Sony Group Corp. 

and Nintendo Co. 
 Additionally, Microsoft said it will license part of Activision’s cloud-gaming business to a rival in the U.K.

Read more: Microsoft’s acquisition of Activision makes Big Tech even bigger — and harder to rein in

The mantra among tech companies seems to be “merge now while you can,” because the law makes it hard to derail vertical deals. “It is almost near impossible,” says Garcia, who is a former deputy attorney general for the state of California.

Next up on the regulatory watchlist is the FTC’s lawsuit against Amazon, in which the agency alleges Amazon is “exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them.”

Read more: Amazon sued by FTC, which alleges the company is ‘exploiting its monopoly power’

Amazon executives discussed how the company’s pricing policies had a “punitive aspect” on sellers, according to internal documents quoted in newly unredacted portions of the FTC’s monopoly lawsuit against the company.

The FTC also claimed that Amazon intentionally destroyed two years’ worth of encrypted internal text messages to thwart the agency’s investigation, and that Amazon knowingly raised the number of irrelevant ads on its website to boost profits.

Amazon has vowed to fight the lawsuit vigorously.

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