Technology

Growing your technology business: Portfolio optimization

The technology sector is experiencing unprecedented change through the creation of technologies and embedding them into product portfolios — with interest and investment in AI in particular. Implementation of virtual worlds, gaming and currencies is also facilitating transactions across platforms.

The sector’s interest around AI is being felt in M&A activity. Technology companies are also pursuing joint ventures, strategic alliances and other deal structures as they strive to build AI capabilities and create or acquire innovative solutions. The deal-making environment is increasingly complex, thanks to recent significant recent updates to antitrust and other deal regulation regimes.

Businesses are evaluating core assets and strategy, sometimes leading to divestments of business lines and workforce redesign. Without careful execution, major workforce changes — such as collective redundancies or outsourcings/nearshoring — can leave businesses open to employment-related litigation, works council and union issues, employee or stakeholder activism as well as reputational damage.

For complex transactions, we provide an integrated end-to-end service that includes corporate, tax, merger and foreign investment control, as well as IP, data privacy/cybersecurity, employment, tax and compliance advice.

In the face of capital constraints, geopolitical risk and global economic headwinds, we can advise on M&A, joint ventures and strategic alliances to access the right technology to support your business strategy.

Future-proofing your technology business: Unprecedented fiscal policy change

Technology companies are experiencing unprecedented shifts in the global tax landscape accelerated by international and domestic tax reform, increased tax transparency and complex compliance requirements. The shifts in the global tax landscape are requiring multinationals to rethink existing structures, identify potential tax risks and evaluate the planning opportunities that have resulted.

With a significant increase in both tax transparency measures and tax authority data interrogation tools, supported by digital capabilities and in many cases AI platforms, tax authorities are becoming more aggressive, focusing on areas such as transfer pricing and permanent establishment risk to raise much-needed revenue. At the same time, technology companies are seeking to maximize the commercial opportunities and revenue from AI.

Proactive tax planning is critical, as is the need to anticipate and have a clear and well-defined strategy to reduce the risk of audits and investigations. The changing tax environment has also increased the uncertainty and risks associated with contentious tax matters and the potential for full-blown controversies to arise.

We can help manage risk across all aspects of the tax life cycle, including re-evaluations of tax strategy, assistance with increased tax dispute complexity and obtaining certainty around Pillar 1 and 2.

Protecting your technology business: Regulatory challenges

Regulators are scrambling to keep pace with emerging technologies, meaning that technology sector clients are facing a patchwork of overlapping, and sometimes diverging, global requirements, including around AI regulation. Organizations are seeking to harness AI opportunities to drive efficiencies, including around the employee life cycle, but they face significant challenges around the oversight of AI tools and must manage the related risks while also maintaining employee trust and confidence.

In parallel, antitrust scrutiny of large technology companies is increasing. European regulators are launching a series of probes against big tech, including around cloud dominance, data transfer, anticompetitive behaviour and the Digital Markets Act, and in the US antitrust lawsuits have also targeted tech companies. UK authorities are set to gain new powers under the Digital Markets, Competition and Consumers Act 2024 while rising protectionism and heightened foreign investment rules – spurred by the continuing geopolitical tension – are only adding to the pressure.

We help to navigate the global patchwork of regulations affecting clients in the technology sector, especially sector-specific regulations and investigations, e.g., DMA, DSA, anticipating challenges and mitigating risk.