Facebook and Giphy logos.

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In 2020, top Meta the executive explained that the company spent $315 million to acquire Giphy “because it’s a great service that needs a home.” Instagram chief Adam Mosseri touted Giphy’s “amazing team” and “clear” user base, and emphasized that Giphy user data “wasn’t the motivation.”

Meta sold Giphy earlier this week Shutterstock for $53 million, a staggering 83% markup. The sale was forced by the UK’s antitrust regulator, which ruled that the Meta acquisition posed a risk to the social media and advertising markets.

That’s a pittance for most tech companies, but the prospect of regulators refusing to approve deals or canceling them after they happen has helped chill an already chilly dealmaking environment, experts told CNBC.

“You’re seeing deals doing 20 to 30 cents on the dollar compared to where they would have been even six to twelve months ago,” US Frontier Fund adviser and former FDIC chief innovation officer Sultan Megji told CNBC.

Regulators in Europe and the United States have been eyeing giant deals, for example MicrosoftThe proposed acquisition is worth $69 billion Activisionand smaller ones like Amazon’s A $1.7 billion acquisition of a vacuum cleaner iRobot.

Jonathan Kanter, who heads the Justice Department’s antitrust division, and Lina Hahn, the chairman of the Federal Trade Commission, have been given broad powers by President Joe Biden for potentially anticompetitive behavior. The federal government has opened a case or investigation into Amazon, Google, Jetblue airlineMeta and Microsoft.

Prior to his position at the Justice Department, Kanter was in private practice advising directors and executives on potential transactions and related pitfalls. Khan made a name for herself with an oft-cited magazine article about Amazon’s anti-competitive influence.

The Biden administration has “increased scrutiny of deals and increased enforcement,” Morrison Foerster co-head of global risk and crisis management Brandon L. Van Graack told CNBC.

Van Grack, the former head of the Justice Department’s Foreign Agents Registration Act unit, noted that regulatory scrutiny had increased in the years leading up to the current administration.

Still, leading consultants say boardrooms are now placing more weight on regulatory concerns. High-profile actions played a role in this, as well as increasing the complexity and number of regulation modes.

From the FTC’s point of view, advanced thinking is welcome. “Thousands of deals still happen every year. But if mergers don’t leave the boardroom because they violate antitrust laws, that means we’re doing our job,” FTC spokesman Douglas Farrar told CNBC.

The CFIUS factor

It’s not just FTC or DOJ concerns that are slowing deals. According to PwC research, the number of publicly disclosed reviews from the all-powerful Committee on Foreign Investment in the US (CFIUS) has increased by 50% since 2020.

This figure does not include CFIUS attorneys’ appeals warning companies against deals, or non-public CFIUS review letters. The committee typically operates in a highly secretive manner and, apart from a public and lengthy review by TikTok parent ByteDance, is rarely in the public eye.

That’s because CFIUS is tasked with reviewing corporate acquisitions that could affect national security, among other things. Even the suggestion of a CFIUS review could derail a deal entirely or force a favored bidder out of the bidding.

For example, cryptocurrency exchange Binance reached an agreement to acquire bankrupt crypto lender Voyager Digital in late 2022. Binance’s bid comes after Voyager’s first deal with allegedly fraudulent crypto exchange FTX collapsed due to the latter’s November 2022 bankruptcy filing.

Shortly after the Binance-Voyager deal was announced, CFIUS sent a letter informing Voyager that it would be reviewing the deal.

CFIUS is a powerful “tool” in the US government’s arsenal, Van Graak told CNBC. Through CFIUS, the Justice Department has been able to take on an “increasing role in the review and scrutiny of these transactions,” Van Grack said.

The international scale of most transactions further complicated the situation. Not just one regulator can decide on an acquisition or merger. The first question now has to be “how many jurisdictions do we cover,” Van Graak said.

From now on, appeasing regulatory concerns, whether anticompetitive or national security related, can mean waiving or mitigating the consequences. It could also mean, as with the CMA in the Activision-Microsoft deal, that regulators will move to block the deal entirely.

While boardrooms and executives weigh deals big and small, advisers are forced to contend with a global mass of competing regulatory interests, Van Graak said. “It’s just a more complicated web of, ‘Are we going to get approved? How long will it take? Will there be mitigation, and what will that mitigation look like?”

“These questions are becoming increasingly difficult to answer,” he said.

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