Alphabet's Wiz Deal May Face Opposition in DC Regardless of Election Outcome

Alphabet's $23 Billion Bid for Wiz Faces Regulatory Challenges

Alphabet could encounter significant US regulatory scrutiny with its reported $23 billion bid to acquire cloud cybersecurity company Wiz. This deal is expected to undergo intense review, potentially delaying approval until the next administration takes office. No matter who wins the White House, Alphabet, already contending with multiple antitrust issues, might face more legal battles.

Increased Focus on Vertical Issues

Recent administration trends indicate a heightened scrutiny on vertical mergers, beyond what has historically been common. Experts point out that this approach was seen under both the Trump and Biden administrations. The current administration has sought to regulate various sectors, including tech, healthcare, and groceries. Even if Trump were to return to office, major tech firms would likely continue to face rigorous antitrust investigations, similar to those initiated during his previous term.

During Trump's presidency, high-profile antitrust probes targeted Apple, Amazon, Meta, and Alphabet's Google. The administration also filed a lawsuit against Google for its dominance in search engines, which the Biden administration chose to pursue further. In a recent interview, Trump suggested that regulation might be necessary to protect children, although he advocated for a measured approach to avoid damaging the tech industry. His vice-presidential pick, Sen. J.D. Vance, has praised Lina Khan, the current head of the Federal Trade Commission (FTC), for her stance on tech mergers.

Regulatory Review and Potential Outcomes

According to experts, a potential Alphabet-Wiz deal would inevitably trigger an antitrust review. However, a Trump-led DOJ or FTC might prefer seeking concessions from Alphabet instead of pursuing litigation if competitive concerns arise. Regulators could examine whether Google is already active in the cloud cybersecurity market, potentially framing the acquisition as a hypothetical threat to competition.

An investigation into potential threats, even if not strongly supported by evidence, could be seen as valuable for advancing legal standards. Such a process would be time-consuming. If the acquisition proceeds, the FTC or DOJ would conduct the investigation, which typically starts with a preliminary review lasting 30 days, with possible extensions. A more thorough “second request” stage could extend the review another six to 18 months, culminating in a legal challenge only after this extensive evaluation period.

International Regulatory Hurdles

In addition to US regulatory hurdles, an Alphabet-Wiz deal might attract scrutiny from international authorities, especially in the EU. European regulators have been intensifying their focus on American tech giants, which could complicate matters further for the companies involved. Recently, Microsoft faced antitrust charges from European regulators, underscoring the global regulatory challenges that such a deal could provoke.

Conclusion

The journey for Alphabet's acquisition of Wiz appears fraught with regulatory complexities both domestically and abroad. With extended review periods and potential international scrutiny, the path to finalizing the deal remains uncertain, offering a glimpse into the intricate dance between tech giants and regulatory bodies.