Regulators are not shy about thwarting Big Tech acquisitions. Yet Google parent company Alphabet may be willing to run that gauntlet by acquiring CRM player HubSpot.
The deal is anything but certain. Reuters reports that Alphabet has met with bankers from Morgan Stanley in recent days. Topics at hand are how much it should offer and, crucially, whether regulators would give their okay.
Why HubSpot?
HubSpot offers a CRM platform that supports all kinds of customer service, marketing, and sales activities. The software is free to download, but offers different subscriptions depending on an organization’s needs. It is sometimes described as a lightweight alternative to Salesforce, with more ease of use but fewer features.
Alphabet could make waves in the CRM market with the proposed acquisition, while HubSpot’s offerings could provide many attractive integrations with Google’s suite. Connections between Google Cloud and HubSpot, by the way, already exist for joint customers.
Possibly biggest Alphabet deal ever
HubSpot suffered a net loss of $176.3 million in 2023. Nevertheless, with a market value of $35 billion, it would be by far the largest party ever to be acquired by Alphabet. So far, the 2011 deal for Motorola Mobility is the largest at $12.5 billion. Google sold it to Lenovo three years later for just $2.91 billion.
Tip: HubSpot integrates WhatsApp into CRM platform
The largest acquired company that has so far remained in the Alphabet fold is security company Mandiant. That party was incorporated in 2022 for $5.4 billion. At the time, regulators did not stand in the way: the announcement in March was followed by the official acquisition in September.
Will regulators throw a spanner in the works?
It is highly doubtful that it will be as easy this time. First, regulators in the US, EU, UK, and China have alternately caused delays and forced major commitments to allow recent Big Tech acquisitions to go through. Microsoft was forced to give lengthy explanations to acquire Activision-Blizzard, while Broadcom also had to delay the official acquisition date of VMware. Nvidia ultimately decided against acquiring Arm due to insurmountable regulatory hurdles.
Those deals required a significantly higher dollar amount than HubSpot’s value. However, Google and parent company Alphabet are in the crosshairs of regulators, and several lawsuits are pending. For example, the dominance of the Google Play Store on Android is under pressure, while Google’s advertising services are a thorn in the side of the European Union, among others. A potential HubSpot acquisition cannot count on the benefit of the doubt from antitrust watchdogs.
Also read: EU investigating Google, Apple and Meta for Digital Markets Act violations