Transactions

In this blog post we set out key practical steps for technology-focused deal-making, having regard to the regulatory, antitrust and foreign investment screening issues identified in our earlier blogs here and here.

Key impacts of technology regulation on deal outcomes

The evolving regulatory landscape is having a significant impact on deal outcomes, including (i) longer timelines due to complex regulatory approval requirements; (ii) higher diligence burden, especially around data, AI and ownership transparency; (iii) greater risk allocation pressure in deal terms; and (iv) increased use of creative structures to mitigate regulatory exposure. Continue Reading Technology Industry Trends and M&A Outlook in the EU and UK, Part 3: Recommendations for Tech M&A and Strategic Transactions

Until the last year, merger control in the UK has been fairly hostile towards tech deals, with a highly interventionist competition authority taking an uncompromising line on global deals; even where those deals had only a limited nexus to the UK. The EU has generally taken a more pragmatic approach, clearing Google’s acquisition of Fitbit in 2020, and Microsoft’s acquisition of Activision in May 2023, following the acceptance of remedies by the tech firms. However, it, too, has taken some more hardline positions, such as prohibiting the Booking.com/etraveli merger based on a novel theory of harm related to the Booking.com travel ecosystem. 

This has all taken place against the backdrop of an explosion of tech regulation (see our prior blog post here). The wave of new rules also introduced new merger filing requirements for those tech firms who have been designated as gatekeepers in the EU (under the Digital Markets Act (DMA) (2022)), or firms with strategic market status in the UK (under the Digital Markets Competition and Consumers Act (DMCCA) (2024)). Just this month the CMA designated Google with strategic market status (SMS) in general search and search advertising services. This comes, almost to the day, two years after the EU’s designation of Google’s parent company and five others as gatekeepers. More tech regulation is on the horizon, for example the remaining parts of the AI Act, on general-purpose AI, are due to enter into force in the EU in August 2026.Continue Reading Technology Industry Trends and M&A Outlook in the EU and UK, Part 2: Antitrust/FDI Environment for Tech

Technology-focused deals are driving many of the largest global M&A and strategic transactions—whether digital infrastructure, artificial intelligence (AI), digital services or gaming. The successful execution of these transactions and ultimate success of the business opportunities promised by them, depends on understanding how emerging technology, regulation and market norms are evolving. In this three-part blog series, from an EU and a UK perspective, we will cover: (1) the new regulatory landscape for tech, (2) the evolving antitrust and foreign investment screening environment and (3) recommendations for planning, structuring and executing technology-focused M&A and other strategic transactions.Continue Reading Technology Industry Trends and M&A Outlook in the EU and UK, Part 1: The New Regulatory Landscape for Tech

Recent proposals to amend the UK’s national security investment screening regime mean that investors may in future be required to make mandatory, suspensory, pre-closing filings to the UK Government when seeking to invest in a broader range of companies developing generative artificial intelligence (AI). The UK Government launched a Call for Evidence in November 2023 seeking input from stakeholders on a number of potential amendments to the operation of the National Security and Investment Act (NSIA) regime, including whether generative AI, which the Government states is not currently directly in scope of the AI filing trigger, should expressly fall within the mandatory filing regime. The Call for Evidence closes on 15 January 2024.

This blog sets out how the NSIA regime operates, how investments in companies developing AI are currently caught by the NSIA, and the Government’s proposals to refine the scope of AI activities captured by the regime, including potentially directly encompassing generative AI.Continue Reading UK Government Consults on Amending Mandatory Filing Obligations for AI Acquisitions

Earlier this week, the Federal Communications Commission (“FCC”) announced a limited exemption from the obligation that holders of international Section 214 authority respond to a forthcoming one-time information request concerning their foreign ownership.  The narrow exemption provides relief from the reporting obligation for international Section 214 licensees that have made foreign ownership disclosures to the Executive Branch agencies known as “Team Telecom” within the last three years, subject to certain conditions.Continue Reading FCC Announces Limited Exemption from Forthcoming One-Time Foreign Ownership Disclosure for International Section 214 Licensees

Updated August 8, 2023.  Originally posted May 1, 2023.

Last week, comment deadlines were announced for a Federal Communications Commission (“FCC”) Order and Notice of Proposed Rulemaking (“NPRM”) that could have significant compliance implications for all holders of international Section 214 authority (i.e., authorization to provide telecommunications services from points in the U.S. to points abroad).  The rule changes on which the FCC seeks comment are far-reaching and, if adopted as written, could result in significant future compliance burdens, both for entities holding international Section 214 authority, as well as the parties holding ownership interests in these entities.  Comments on these rule changes are due Thursday, August 31, with reply comments due October 2.Continue Reading Comments Due August 31 on FCC’s Proposal to Step Up Review of Foreign Ownership in Telecom Carriers and Establish Cybersecurity Requirements

Last week, Chairwoman Jessica Rosenworcel of the Federal Communications Commission (FCC) announced that she expects to circulate a proposal shortly that will authorize the FCC and/or certain national security agencies to periodically evaluate the foreign ownership of FCC licensees in light of national security considerations.  She made this announcement in a speech that focused on…

Continue Reading FCC Chairwoman to Propose More Frequent Foreign Ownership Review of FCC Licensees for National Security Purposes

Technology equity markets took a sharp turn in the last two months of Q1 2022, with S&P Technology Index reaching to over 18% in the red in mid-March, before closing the quarter at 7% off.  In the last month, across all sectors, Russia’s attack on Ukraine has rattled markets and dented investor appetite amid increased…

Continue Reading Ukraine Crisis:  Changing M&A Transactions for Technology Companies

            On April 28, 2022, Covington convened experts across our practice groups for the Covington Robotics Forum, which explored recent developments and forecasts relevant to industries affected by robotics.  The global robotics market has been experiencing a significant transformation, with robotics growing beyond traditional industrial uses and taking on an ever-increasing amount of new roles…

Continue Reading Robotics Spotlight: National Security Considerations in Foreign Investment and M&A Involving Robotics

On Friday, April 22, 2022, the National Telecommunications and Information Administration (NTIA), which is part of the Department of Commerce, issued a request for comment (RFC) on the state of competition in the mobile app marketplace.  According to the RFC, the record developed will be used to inform the Biden Administration’s competition agenda, including a report on competition in the mobile app ecosystem.  Comments are due on May 23, 2022.
Continue Reading NTIA Seeks Comment on Competition in the Mobile App Marketplace