John Durie: Latest Google acquisition presents first digital merger dilemma for new ACCC chair

Google has presented incoming ACCC chair Gina Cass-Gottlieb with an early dilemma after its US$5.9 billion ($8.1 billion) acquisition of cloud computing and cybersecurity business Mandiant.

The deal shows Google wants to differentiate itself from larger cloud rivals Amazon (33% share of the cloud market) and Microsoft (20%) to help it grow market share from its 10% level.

But it faces strong anti-trust scrutiny in the US, Australia and elsewhere because of Google’s dominant position in the search and ad tech markets, with regulators concerned the digital platform giants are using strength in one field to extend their influence in others.

Outgoing ACCC chair Rod Sims has pushed for tighter merger controls particularly for digital platform companies like Google but Cass-Gottlieb has yet to opine on the issues. She is due to start as ACCC chair on March 21.

This is Google’s first acquisition since last year’s US$2.1 billion ($2.89 billion) Fitbit deal, which was delayed for 14 months due to anti-trust concerns.

After doing a deal with US regulators it proceeded, ignoring the fact the ACCC was still considering the deal.

Cloud computing accounts for only 7% of Google’s revenues but is fast growing, and the timing of the Mandiant deal is good with cybersecurity concerns heightened by Russia’s invasion of Ukraine.

The deal is the biggest for Google since its US$12.5 billion ($17.19 billion) acquisition of Motorola’s mobile phone business in 2012.

This didn’t work well and the division was sold to Lenovo two years later for US$2.9 billion ($3.99 billion).