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Google's Proposed Massive Acquisition Would Lead To A New Regulatory Battle

Google's Proposed Massive Acquisition Would Lead To A New Regulatory Battle
Even though many analysts think that Google parent Alphabet's planned acquisition of marketing software business HubSpot would not curtail competition, it would require the tech giant to create a new front in its struggle with antitrust watchdogs. Regulators would undoubtedly oppose the acquisition.
The previous week, Reuters revealed that Google was considering making a $34 billion bid for HubSpot. Google has not yet decided whether to make an offer after considering the antitrust concerns of a possible acquisition.
In interviews and analyst notes, almost a dozen antitrust specialists and business analysts stated that they doubted Google's acquisition would hurt competition.
They claimed that this is the case since a number of significant companies, such as Salesforce, Adobe, Microsoft, and Oracle, already have a presence in the so-called customer relationship management (CRM) software market, where HubSpot operates. Since Google does not compete in the CRM space, they continued, the acquisition may strengthen HubSpot's position given Google's cloud computing capabilities, resulting in better customer offers and costs.
Technology analyst Gartner estimates that in 2022, HubSpot—which caters to smaller clients—will hold a 4.9% market share in the CRM marketing software sector, while Salesforce and Adobe will each have a 15% share.
However, these experts also stated that in light of their growing distaste for the consolidation of IT giants by way of merging, it is highly possible that objections from American and European antitrust authorities would follow a Google acquisition of HubSpot.
Researchers who are installing solar-powered sensors in coffee plants are hoping for that outcome.
They further stated that Google would need to persuade HubSpot to join them in arguing the deal's benefits in a protracted legal dispute.
"My first impression is that the antitrust authorities would likely oppose this kind of arrangement," stated Seth Bloom, who presently owns his own advice company and was the general counsel of the U.S. Senate antitrust subcommittee.
There were no comments available form Google and HubSpot.
Google is now dealing with a number of antitrust issues, including two cases brought by the US Department of Justice. While one claims it is monopolising the digital advertising sector, the other accuses it of abusing its dominant position in internet search.
A request for comment from a Department of Justice representative was not immediately answered.
In Europe, Google faces an even more challenging regulatory environment. It is one of the IT companies that the EU is looking into for possible violations of the recently passed Digital Markets Act, a regulation that facilitates users' ability to switch between rival online services including social media sites, browsers, and app stores.
"The Commission has not received formal notification of this transaction. A representative for the European Commission, the executive branch of the EU that has previously penalised Google for engaging in anticompetitive activities in online search, stated that it is always the responsibility of the corporations to notify the Commission whether a transaction qualifies as a concentration and has an EU component.
The majority of computer giants have decided against pursuing massive acquisitions due to the level of antitrust scrutiny. The latest significant acquisition was Microsoft's (MSFT.O), opens new tab $69 billion purchase of Activision Blizzard, the company behind "Call of Duty." The Xbox console maker was only able to get past British regulators by agreeing to give up the streaming rights for Activision's games.
With "no clear path" for antitrust permits in Europe and Britain, Adobe withdrew its $20 billion offer for the cloud-based design platform Figma in December. The regulators were concerned about Figma's smaller competitors' capacity to compete.
Before considering HubSpot, Google has refrained from making significant acquisitions. Over ten years ago, it made its largest-ever transaction—paying $12.5 billion to acquire Motorola Mobility. With acquisitions like DoubleClick and AdMob, it has demonstrated a preference for advertising acquisitions while keeping its dealmaking modest.
Google has become a major player due to its growing $110 billion cash reserve and the necessity of more efficient capital allocation for profit. While Although, like its counterparts, it is making significant investments in artificial intelligence, its shareholder returns over the past several months have fallen short of those of Microsoft and Meta Platforms, two other major participants in this market.
Professor of antitrust at George Washington University Law School William Kovacic claimed that Google's hegemony in internet search had damaged the company's reputation with regulators, even in markets like CRM software where it is not a competitor.
"If you slam the door shut on mergers that could permit a nonparticipant or a weaker participant to get a bigger foothold in the market, you've withdrawn an important potential source of rivalry in the market," Kovacic said.

Christopher J. Mitchell

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