A deal like this would have gone almost unnoticed by regulators a few years ago. Now all eyes are on it even if no clear problem has been identified
A transaction like this would have gone unnoticed until recently: Facebook first announced the acquisition of Kustomer (a provider of CRM software) in November 2020. The terms of the transactions were not disclosed, although reports indicated it was $1bn for a company that booked $60m in revenue in 2019. Until recently, an acquisition like this one would have gone almost unnoticed by competition authorities. The size of the company, and the fact that it sells a product far from Facebook’s core business, would have likely led regulators to wave the deal through without scrutiny. But things clearly changed in 2021, and antitrust authorities are wary of letting Big Tech become even bigger via these so-called killer acquisitions.
The mood music has changed: The UK’s CMA is only the latest in a series of authorities that are scrutinising the deal. Friday’s announcement of the opening of a Phase 1 investigation came a week after the German regulator’s decision to do the same. The European Commission is also looking at the deal, following a request from the Austrian competition authority (even though the deal did not meet the turnover threshold that would trigger the EC’s intervention). Similar dynamics are at play in the US, where the Federal Trade Commission is reportedly carrying out an in-depth investigation on the deal – something that only happens in a small fraction of cases. To provide some perspective, Facebook’s $19bn acquisition of WhatsApp in 2014 was approved by the FTC in less than two months without an in-depth review.
No clear harm has yet been identified: What’s striking in all these investigations is that no authority has yet explicitly stated what the threat to competition the acquisition would pose. It’s of course possible that other providers of CRM products could be at a disadvantage once Facebook has scaled up Kustomer’s business and strengthened the integration of Kustomer’s product with its own social media platforms. This is a clear indication of the fact that regulators want to take a radically different approach from the past, and no longer want to waive through transactions where the immediate harm may be difficult to determine.
Source: https://www.gov.uk/cma-cases/facebook-inc-dot-slash-kustomer-inc
