Key topics in this section
In most jurisdictions, technology has become an extremely sensitive subject. From the personal data held by businesses to the safeguarding of nationally sensitive technologies in an increasingly febrile geopolitical landscape, regulators have a clear focus on tech. As a result, the range of deals likely to attract regulatory scrutiny thanks to tech issues has widened. Legal assessments must now start well before the formal filing stage.
Jean-Robert Bousquet, Partner, M&A and Private Capital,
in Paris, at Eversheds Sutherland, explains how this works
in practice: “We were working to acquire a division of a
French company that sold training software for operators
of a variety of equipment, including military hardware.
“This becomes very complicated because for the military
part you have national security issues. It meant we’d need
to make sure that the data could still be held by the target
company after we had have bought it; but also that the
acquirer would not be prevented from owning or
managing that data. It might be as simple as having an
in-country subsidiary to take effective ownership of it, but
it was a big concern around the structure post-deal.”
Why technology assets attract strategic regulatory scrutiny
The impact of regulation around ‘national securityrelated’
tech is obvious. But this definition increasingly
encompasses not only military tech, but also digital
infrastructure, AI capabilities, robotics, semiconductors,
sensitive datasets, and technologies with cross-sector or
dual-use applications. In many jurisdictions now, the
definition of ‘strategic industrial capability’ goes well
beyond arms.
Data and technology no longer sit only within privacy laws
or sector regulation, either. There are also live issues in
merger control, foreign direct investment screening,
national security review (see next section) and emerging
AI regulation. Good examples of this include the EU AI Act,
which came into force on 1 August, 2024, and its Data Act,
which has applied since 12 September, 2025. Together,
these measures create a denser regulatory environment
around who controls data, how AI systems are deployed
and what cross-border transfers or access arrangements
are acceptable.
“AI technology and data is increasingly fundamental to
how competition and national security / foreign direct
investment regulators assess M&A deals. Competition
regulators look to assess how important access to AI
technology and data is and how this impacts competitive
dynamics. In a national security context, foreign direct
investment regulators are focussed on protecting AI
technology and access to sensitive data,” says Peter
Harper, Partner in Eversheds Sutherland’s Competition,
Trade and Foreign Investment team and International Head
of Competition. “On the flipside, competition regulators,
for example in the EU and UK, are looking at ways to
change the way they assess some M&A deals to potentially
allow more freedom to enable digital players to merge and
create more national or regional champions. AI lies at the
heart of that.”
The US has moved in a similar direction, albeit from a
different angle. The Department of Justice’s Data Security
Program came into effect in April 2025, with restrictions
on certain data transactions involving Americans’ bulk
sensitive personal data, as well as government-related
data. That may not affect every deal, but it is precisely the
sort of rule that can turn a previously routine diligence
point into a transaction-structuring issue, especially in
cross-border or private-capital-led processes involving
portfolio companies with significant data assets.
In the UK, the ICO’s guidance is explicit that in any merger
or acquisition involving transfer of personal data, buyers
must examine the original purposes for which the data
was obtained, the lawful basis for sharing it, and whether
those bases remain valid after the change of control.
Mapping regulatory risk before the filing stage
Technology and data issues, then, need to be mapped
earlier and more systematically. That turns data
diligence into more than a compliance checklist. It
becomes part of determining whether the asset being
bought can in fact be used in the way the buyer expects. If
the value thesis depends on combining datasets, using
customer information differently, training AI systems on
acquired data, or centralizing operations internationally,
there must be a legal view on whether the target’s
permissions, notices, contracts and governance
arrangements permit that use.
There’s also an important political dimension to consider.
Screening regimes are no longer confined to classic
antitrust logic. They increasingly reflect industrial
policy, national resilience and competitiveness, and
geopolitical concerns.
A fresh appetite to create national or regional ‘champions’
is now appearing in draft merger guidelines in a way they
would not have done a few years ago, as regulations adapt
to the political demands of their governments. That
creates more uncertainty, but also more room for strategic
advocacy. In practical terms, clients need counsel who
can do more than identify whether a filing is required.
They need advisers who understand how regulators are
currently thinking about data, AI, infrastructure and
strategic autonomy.
The cost of regulatory clearance for deals should also
come under increasing pressure from the deployment of
technology. Anecdotal evidence suggests that compliance
is rapidly becoming a more significant workstream in the
deal process.
This trend is particularly evident in cross-border deals,
where growing geopolitical uncertainty has stiffened
regimes and the resolve of regulators to deliver political
outcomes. But, increasingly, emerging and precedent-lite
regulations around data will demand a more nuanced
legal perspective.
“In the European Union, the Foreign Subsidies Regulation
requires parties to compile detailed data spanning the
prior three years,” says Cristina Audran-Proca, Partner,
M&A and Private Capital, in Paris, at Eversheds Sutherland.
“That is a highly data-intensive process, and our colleagues
on the regulatory side, as well as our clients, are leveraging
technology to manage it far more efficiently. It’s a
compelling use case – what was once an enormously
manual exercise is becoming significantly more
streamlined.”
There is clearly scope here for AI and related technologies
to speed up the desk work of compliance and structuring
deals around regulatory requirements. But it’s another
example where any resultant increase in deal complexity
magnifies the requirement to take a considered, informed
and ultimately very human view of potential tech-related
regulatory hurdles.
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