Mergers in the tech industry are drawing more scrutiny than ever before. As companies seek to consolidate products, talent, and user bases, regulators are focusing on how these deals could limit competition. What may appear to be standard business growth can raise legal concerns if it impacts market access, pricing, or consumer choice.
Regulatory bodies like the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have made it clear that they intend to review large mergers more critically, especially when one of the parties already has significant market power. Mergers involving data-rich platforms, cloud services, and digital infrastructure are common targets. Size alone does not determine whether a deal will receive attention, but dominance in a given sector combined with an acquisition of a smaller competitor often raises flags.
Market Definition Plays A Central Role
A key issue in many of these matters is how the relevant market is defined. A company might argue that it operates in a broad market, while regulators may define it more narrowly. For example, if a company owns a dominant social media platform and acquires a fast-growing app, regulators might consider both to be in the same market for user attention or targeted advertising.
Once the market is defined, the next step is determining whether the merger will substantially lessen competition. This is often where a qualified antitrust lawyer becomes essential. They can help assess how the transaction might be viewed and what data or arguments will be persuasive. They will be able to advise you on what possible legal issues you may encounter throughout this process.
Mergers Involving Startup Targets May Still Raise Concerns
Tech companies often acquire startups not only for their product but also for intellectual property, engineering teams, or user data. Even if the target has minimal revenue, a merger can trigger investigation if regulators believe it eliminates a potential future competitor. These so-called “killer acquisitions” are of particular interest in software, AI, health tech, and cloud platforms. With rapidly evolving technology, these sectors are being more scrutinized than ever before.
In some cases, the deal may be challenged before it is completed. In others, the transaction is allowed but with conditions, such as divestitures or conduct requirements. The cost and disruption of defending such a case can be significant. Antitrust enforcement is not limited to the largest companies—any deal that affects competition in a meaningful way could draw attention.
Global Enforcement Adds Another Layer
Technology businesses often operate globally, and mergers may require approvals in multiple countries. A deal approved in one jurisdiction can still be delayed or blocked elsewhere. The European Commission, for instance, applies its own standards that may differ from those in the U.S. This multi-jurisdictional risk is one of the more difficult legal challenges that companies face in cross-border tech deals.
Coordination across jurisdictions, while not required, is often helpful. Timing, filings, and strategic communication must all be carefully planned. As our friends at COFFYLAW can attest, a well-prepared strategy and early advice can reduce surprises down the line.
Early Planning Matters
Antitrust concerns can significantly reshape the structure or terms of a technology merger. Dealmakers should involve counsel early — before the public announcement, ideally. Evaluating the likelihood of review, preparing appropriate disclosures, and identifying potential remedies are all important steps.
No company wants to face enforcement actions after committing significant resources to a merger. By planning with an experienced team and anticipating key issues, businesses are better positioned to move forward with confidence while limiting the risk of enforcement delays or litigation. Contact an attorney near you to get started.