While revoking former President Joe Biden's executive order on competition may make M&A more favorable for tech companies, it doesn't hand the industry a pass for future deals.
President Donald Trump revoked former President Joe Biden's executive order on competition policy, further signaling the administration's move away from regulatory scrutiny of U.S. companies.
Biden's 2021 competition executive order contained 72 initiatives, including heightening merger scrutiny and tasking federal agencies with creating rules regarding competitive practices in online marketplaces.
While the order was largely aimed at big tech companies, it supported entities beyond the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ), such as the Department of Agriculture, to promote broader pro-competitive policymaking across industries. Trump's decision this week to revoke Biden's competition order indicates a shift in the federal government's approach to competition policy, especially when it comes to big tech.
Alan Pelz-Sharpe, founder of market research firm Deep Analysis, described Trump's revocation of the competition order as an "odd decision," considering that major competition concerns still exist in the tech sector.
This was a market that needed more scrutiny around its anticompetitive behavior, not less.
Alan Pelz-SharpeFounder, Deep Analysis
Pelz-Sharpe said those concerns could be heightened, given heavy investments in AI in recent years by companies like OpenAI, Google, Microsoft and Nvidia. Pelz-Sharpe said there is fear that a handful of major players will control AI at scale, which could raise costs and create vendor lock-in for enterprises.
"At the very least, this move will embolden the largest tech buyers to put more pressure on, or potentially acquire, competitors," he said. "This was a market that needed more scrutiny around its anticompetitive behavior, not less."
Trump removal of Biden order a symbol
Trump's move to revoke Biden's executive order reflected the administration's belief that Biden's program relied too much on top-down regulatory commands, said William Kovacic, a competition law professor at The George Washington University.
Indeed, FTC Chairman Andrew Ferguson applauded Trump's removal of the order, naming top-down competition regulations and agency rulemaking for implementing U.S. competition policy as a barrier to business growth and innovation.
However, Kovacic said he believes the move is largely symbolic.
"There's such an urgency on the part of the White House and on the part of the antitrust agency leadership to say 'We are not Biden,'" Kovacic said.
Ferguson reinforced that the Trump administration will continue devoting resources to enforcing U.S. antitrust laws to foster new innovation, improve product quality and lower cost of living.
The FTC will likely take a different approach to accepting settlements, removing procedural obstacles and allowing benign deals to go ahead, Kovacic said. That means the M&A environment will likely be more favorable to tech companies, he said.
"The Biden administration did use a variety of procedural devices to make it harder for deals to go ahead," Kovacic said. "They are doing something different there. But they are not simply opening the door and saying anything goes."
While Trump's removal of Biden's order symbolizes a shift from that administration's policies, Kovacic said there are pieces of the Biden competition policy order that align with the Trump administration and will likely stick around, including the FTC and DOJ merger guidelines released during the Biden administration.
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
