For years it seemed like the tech sector could do no wrong. Now, it seems like the industry can do nothing right. Consumer sentiments about tech giants have dipped since 2020, according to this year’s Axios Harris Poll 100. Software and social media giants have seen the biggest plunge.

Concerns about data privacy, misinformation, content moderation, and free speech seem to have taken the sheen off these once-invincible brands. Now, the concerns have boiled over to the regulatory side, where pressure continues to build.

“We have seen an increase in regulatory scrutiny in a number of areas that we expect to continue into 2023 and potentially beyond,” says David Gibbons, partner at Hogan Lovells. “For example, the FTC [Federal Trade Commission] and DOJ [Department of Justice] have both significantly increased antitrust enforcement activity by blocking or indicating an intention to block a number of transactions over the last year. Both the FTC and DOJ have made a number of announcements and appointments during 2022 that indicate intent for an even more active regulatory role in 2023.”

A crackdown on the tech sector is a key element of President Joe Biden’s policy initiatives. The President has appointed Lina Khan, Jonathan Kanter, and Tim Wu to head the DOJ and FTC – all of whom have expressed the need to reform antitrust regulations. The FTC’s withdrawal from the 2020 Vertical Merger Guidelines has been the most consequential move so far. The move creates uncertainty for some mergers and acquisitions targeted at vertical integration.

Another target is national security. President Biden signed an executive order that requires The Committee on Foreign Investment in the United States to closely inspect any foreign investment into four key sectors: cybersecurity, supply chain technology, personal data, and technology leadership. Gibbons says he expects more scrutiny of cross-border M&A transactions in the tech sector, given the “on-going geopolitical challenges and the recent adoption of a new or enhanced national security regiment.”

Meanwhile, fraud and investor safety are also growing concerns. “Two other areas where there has been increased Congressional focus are the SPAC industry and cryptocurrency,” says Gibbons. “In light of what has happened in the SPAC industry in 2022, we expect Congress and regulators to be in the spotlight and an increase in regulatory scrutiny on the horizon in those areas as well.”

More regulatory scrutiny could diminish the number of M&A transactions in this sector. However, these policies could also unlock opportunities for small- and mid-sized tech firms looking to expand. The policies could also private equity firms and institutional investors to buy tech companies that would have been strategically acquired by tech giants in the past.

Vishesh Raisinghani