The Department of Justice is seeking more information about Salesforce's proposed $27.7 billion acquisition of Slack, according to an SEC filing on February 16. Though, the agency's antitrust division didn’t share what information was requested from the two companies.
While it’s not uncommon for a small fraction of deals to be subject to closer reviews, in FY 2019, just 61 out of 2,030 transactions received a second request for information, according to Federal Trade Commission data.
In its evaluation, the DOJ must determine whether a future merger will result in anti-competitive behavior, as opposed to an investigation after a merger has occurred. Slack and Salesforce "have and will continue to cooperate fully with the DOJ in its review," according to the filing.
Some are speculating that the DOJ’s involvement indicates a new era of greater scrutiny into prominent technology transactions under the Biden Administration. In Congress, Amy Klobuchar, a Democrat from Minnesota who became chair of the Senate’s Judiciary subcommittee on antitrust, proposed a sweeping reform of antitrust enforcement.
The proposed deal, which would be Salesforce’s largest to date, would unite two companies that both seek to challenge Microsoft, the world’s largest software company.
Slack has been vocal about competition in the tech space before. The company introduced an antitrust claim against Microsoft last year in the European Union, an action that could come into play in the DOJ review. Slack called out Microsoft for the "illegal and anti-competitive practice of abusing its market dominance," according to a statement from Slack.
Salesforce said it still continues to expect to close the acquisition in the quarter ending July 31.
"We’ve appreciated our constructive dialogue with the Department of Justice and look forward to it continuing,” a Salesforce spokesperson told CNBC. “We strongly believe this transaction will be transformative for customers and the industry and will enable companies to grow and succeed in this all-digital, work-from-anywhere world.”
This isn't the first time the DOJ has investigated big tech. In October 2020 it filed a heavily anticipated antitrust case accusing Google of having an unfair advantage in search and online advertising. The case alleges that Google disadvantaged competitors through a network of exclusionary business deals. It's the largest legal challenge Google has faced and is likely to result in a court fight that could last years.
Now with this latest investigation, it seems the tech giants who have long dominated the industry may face further increased scrutiny in their business practices.
