Back Off, Regulators!
Enough already. The European Union steps in and blocks Oracle's plans to buy Sun Microsystems. The EU levies a $1.45 billion fine against Intel for anti-competitive behavior against Advanced Micro Devices. The US Government continues to review Microsoft's proposed partnership with Yahoo.
Google is in the crosshairs; same with Apple.
A weird thing is happening right now, and it borders on the dangerous. Companies want to merge, and partner, and collaborate, and they have lots of cash on the balance sheet, ready to do deals that may help jumpstart their businesses, light a fire under sluggish markets, increase efficiencies, and generate nice returns for their investors.
Yet federal agencies in this country and abroad aren't merely getting more active when it comes to scrutinizing the deals, they're getting activist.
And that's troubling for a whole host of reasons.
Not the least of which is that all this examination, delay, and scrutiny threatens to derail the very recovery the Feds themselves are trying to encourage.
On the one hand, the US government is flooding the economy with hundreds of billions of dollars in stimulus that instead of going where it needs to go, shoots down some economic rabbit hole instead. And yet when companies try to embark on recovery strategies of their own, the Feds step in and say, "Hold on a second. Give us a chance to review." Which is unfortunate since the Department of Justice's, and Federal Trade Commission's, and Securities and Exchange Commission's and European Union's clocks tend to run much, much slower than the tech industry's clocks.
And the reasons for the all these reviews are suspect at best. In Europe, regulators seem focused on preserving their sense of competition, whether it makes sense to consumers or not. Intel's a hard-charging competitor that might push the boundaries of what's legal, and AMD, like a little brother, might be sick and tired of always coming up short. But it's tough to make the case that Intel is somehow hurting consumers when chip prices and PC prices are so much lower today then they were even a few years ago, and yet so much more powerful and innovative.
And just yesterday, the EU blocks Oracle's purchase of Sun because somehow, owning MySQL, through Sun, will eliminate competition with Oracle. Are you serious? MySQL is an open-sourced entity, and Oracle says the EU's objection "reveals a profound misunderstanding of both database competition and open source dynamics." MySQL, Oracle says, is open-sourced and "therefore can't be controlled by anyone.". Oracle loses. Sun's shareholders lose. The marketplace may also lose.
Even our DOJ took the bizarre step of issuing a statement reminding the EU that this country gave the deal the green light. Which begs the question: is the EU stepping in to block the deal to protect, in some way, the competitive interests of Oracle rival SAP?! Hmmm? Hmmmm?
Come on. Give me a break. Blocking deals, fining companies. And the clincher was last week when New York's Attorney General filed suit against Intel, apparently dissatisfied that ongoing federal investigations and an upcoming suit between Intel and AMD wasn't enough. He has concerns of his own for he good people of his state. Spare me.
I appreciate that state and federal governments are under the gun, desperate for cash, feeling emboldened under a new administration with a decidedly different take on its role in business. And I appreciate the EU's attempts at trying to do in the courts what the companies it represents have been unable to do in the marketplace. But all this new regulation and scrutiny threatens a broader recovery that the marketplace itself is attempting to lead.
I'm not saying that companies can do no wrong, and should be given carte blanche to do whatever they want. But the market can be very dynamic, and has a funny way of solving its own problems. Consumers are smart. So are companies. There needs to be a better balance. The pendulum has swung too far in one direction.
Regulators are becoming way, way, way too involved, and they're doing a disservice to economic recovery. The EU decision yesterday is nonsensical on so many levels. And it points to a far broader, insidious problem that is now a significant threat. So much cash and so much creativity. But with so much government intervention, these companies might decide to put their wallets away, and that would be terribly unfortunate. Especially now.
Message to the feds: Butt out already and let the marketplace take care of itself.