The news: The US Federal Trade Commission (FTC) and the Department of Justice (DOJ) are launching a joint public inquiry to initiate an overhaul of existing merger guidelines that may be out of date and ineffective in today’s Big Tech reality.

What this means: Regulators are reviewing how they approve mergers and acquisitions and are working to adopt more effective rules for today’s billion-dollar tech acquisitions. In context, the last set of rules was written in 2010 for a very different acquisitions landscape, per The Register.

The review will look at how the merger review process is applied to free services, such as those from Google and Facebook. It will also look at advertising-based models that offer free services to users.

• FTC Chair Lina Khan said the time was ripe for merger reviews. 2021 global deals collectively tipped the scales at $5.8 trillion, a record-high number.
• "Times have changed because the advent of the digital economy has transformed industry," said Jonathan Kanter, the DOJ's assistant attorney general. “The digital revolution has not only impacted new markets like tech, but markets across our economy, many of which have been rebuilt from the inside out.”
• The DOJ received twice the number of merger filings in 2020 vs. 2019, which has put a strain on the processing department, per David Lawrence, counsel to the assistant attorney general.
• The consolidation trend is on track to continue in 2022. Microsoft announced Tuesday it was acquiring Activision Blizzard for nearly $70 billion. And last week, Take-Two Interactive committed to buy Zynga for $13 billion.
• The Biden Administration has made antitrust reform a priority, with mergers and acquisitions high on the list of regulatory targets.

What’s the catch? Government regulators are squaring off against more powerful monolithic Big Tech companies that will likely redouble their efforts to stall future antitrust regulations. 

• The FTC’s Khan noted Big Tech companies have devoted “tremendous resources” on acquisitions that are “largely outside of our purview.” Deals worth less than $92 million do not require approval from antitrust regulators.
• Reviewing and implementing new merger regulations could take a long time, creating a vacuum for Big Tech to continue acquiring new companies.