Can the FTC Block Private Company Mergers? The Authority Is Murky.

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Elon Musk announced a $1.25 trillion deal in early February 2026: SpaceX would acquire xAI. The deal raised a question that nobody seems able to answer cleanly: Can the Federal Trade Commission stop it?

The uncertainty isn’t about whether the deal is big—it’s the largest private company merger ever announced by valuation. One company controls critical U.S. space infrastructure and government contracts, the other is racing to build the planet’s most powerful AI systems. The uncertainty is about something more fundamental: Do federal antitrust regulators have clear authority to review, challenge, or unwind a transaction between two private companies that might structure their deal to avoid the normal approval process?

Hart-Scott-Rodino Filing Requirements

A federal law called the Hart-Scott-Rodino Act requires companies to notify the FTC and Department of Justice about deals before completing them if they exceed certain thresholds. For 2026, that threshold starts at $133.9 million in transaction value. A $1.25 trillion deal obviously clears that bar.

But SpaceX remains completely private. No SEC filings. No public financial statements. The company discloses revenue and profit figures only selectively, through insider share sales and secondary transactions.

Regulators depend substantially on the parties to provide accurate data about their businesses, competitive products, market shares, and customer relationships. The FTC can demand more documents if it needs more information—but companies can push back on what documents they have to provide. And this entire process assumes the companies file in the first place.

Enforcement Challenges for Completed Mergers

Federal law blocks mergers that would significantly reduce competition. That language doesn’t explicitly require filing first. Regulators can bring enforcement actions against completed mergers that violate this prohibition.

But the agency learned how extraordinarily difficult unwinding a completed deal can be. Separating the companies after they’ve merged their operations, combined their customer lists, consolidated technology systems, and redirected employees proves vastly harder than preventing a deal before it closes. The costs and complexity mount exponentially as time passes.

For SpaceX-xAI, this creates a strategic calculation. Filing the required merger notice gives regulators an opportunity to investigate during the statutory waiting period and potentially ask a court to stop the deal before it closes. Refusing to file means regulators must sue in federal court alleging violations of both the prohibition and the waiting period requirement itself—which carries separate fines and possible criminal charges. By the time regulators challenge a completed private deal, courts become more receptive to business justifications and efficiency arguments when the parties claim they cannot unwind without severe consequences.

National Security Review Process

SpaceX operates as a major defense contractor. It manages critical satellite infrastructure through contracts with the Department of Defense, NASA, and the U.S. military for national security communications. Starlink provides satellite internet services that military personnel rely upon, and SpaceX launches national security payloads for U.S. government agencies.

This means the deal will almost certainly require review by CFIUS, a government committee that reviews deals involving national security—even though no foreign investor is involved.

National security review happens independently from FTC antitrust review. National security reviewers ask whether a transaction might compromise classified information, defense capabilities, or critical infrastructure. Antitrust regulators ask whether it would reduce competition and hurt consumers through higher prices, reduced quality, or diminished innovation. A transaction could pass national security review while simultaneously raising serious antitrust concerns, or vice versa.

National security approval could take months while the FTC’s initial waiting period expires, potentially allowing the parties to claim they’ve satisfied antitrust obligations even while national security review continues. Conversely, if national security reviewers raise concerns about combining space infrastructure with AI capabilities, they could effectively block or substantially delay the transaction before antitrust regulators complete their competitive analysis.

Competitive Harm Theory: Orbital Computing Infrastructure

If regulators challenge it, the strongest legal theory involves preventing competitors from using its services. SpaceX provides satellite launch services and orbital infrastructure. xAI develops AI models and software that require vast computational resources. A combined entity would have the ability and incentive to develop proprietary orbital data centers for its own AI operations and potentially deny or degrade access for rival AI companies seeking satellite-based computing resources.

Integrating xAI’s AI development with exclusive access to orbital computing infrastructure could force rival AI companies—OpenAI, Google, Anthropic, Meta—to face significantly higher costs to develop comparable space-based computing capacity.

But regulators would need to prove not merely that the combined entity could block competitors, but that it would have the incentive and ability to do so in a way that would reduce competition and hurt consumers.

Space-based computer servers don’t exist yet at commercial scale. The technological and economic feasibility of deploying AI compute in space at commercially viable scale remains unproven. Courts don’t like blocking mergers based on technology that might never work.

Even if space-based computing becomes viable, rivals could pursue alternatives. Blue Origin is exploring orbital computing concepts. These competing projects suggest SpaceX wouldn’t have a permanent monopoly on orbital AI infrastructure, even if it acts quickly. The existence of these alternatives could weaken an FTC argument about blocking competitors.

Shift in Antitrust Enforcement Leadership

Regulatory authority over mega-mergers has faced significant legal challenges recently. Federal courts carefully examined how the FTC defined the market and whether the deal would hurt competition, requiring the FTC to prove with data that the deal would reduce competition rather than speculation about hypothetical competitive futures.

The deal arrives amid a significant shift in antitrust leadership. With the Trump administration’s inauguration in January 2025, the FTC installed Andrew Ferguson as chair, replacing Lina Khan, whose tenure was marked by aggressive challenges and broad interpretations of FTC authority. The current FTC leadership is less likely to aggressively block this particular deal—involving an American company and space infrastructure central to U.S. national defense—than it might have been under Khan’s tenure.

IPO Timeline as Strategic Leverage

Musk has indicated that SpaceX plans to pursue an initial public offering in mid-2026, potentially raising over $50 billion at a valuation exceeding $1.5 trillion. This IPO timeline creates strategic pressure points.

Once a company files paperwork with the SEC to go public, it becomes vastly more difficult for regulators to justify blocking the transaction through a court order. Courts will consider whether public investors in the IPO make it harder to block the deal, pending the FTC’s administrative proceeding. The companies can use the IPO deadline to pressure regulators into making a decision before completing a thorough investigation—or to argue that blocking after public market participation would cause disproportionate harm.

Broader Implications for AI Infrastructure and Competition

A successful deal that establishes the combined entity as the dominant provider of orbital data center infrastructure could meaningfully affect the pace and direction of AI innovation. A combined entity with near-monopoly control over orbital computing resources would face limited competition. It could charge whatever it wants for access to space-based computing. It could prioritize its own AI development over competitors’ needs. It could refuse to provide access at all.

Conversely, blocking or imposing conditions requiring SpaceX to provide open access to orbital infrastructure for competing AI companies could allow competition and innovation to flourish. Smaller AI companies could compete on more equal footing. Prices for space-based computing could remain competitive.

Regulatory authority to make any of this happen remains unclear and disputed. The agency operates under multiple overlapping authorities to challenge deals, but its power over transactions between private companies that avoid the normal approval process remains contested.

This deal will test whether the government retains real authority over corporate consolidation when the parties choose to remain private. As private capital has grown more sophisticated and mega-deals increasingly bypass traditional public market scrutiny, regulators face a legitimacy question: Can regulators stop big companies from using loopholes in merger law?

Market observers and antitrust experts are waiting for several critical developments: formal filing that would establish the official timeline for FTC review; if the FTC asks for more information, signaling serious concerns; the national security review process unfolding on its own timeline; and the companies’ IPO preparations creating strategic time pressure on both regulators and the companies themselves.

If the FTC successfully blocks the merger in court, it would send a message that even the most sophisticated operators cannot escape antitrust scrutiny by remaining unlisted. If the FTC doesn’t challenge the merger or challenges it weakly, it would send the opposite message: that private company mega-deals, particularly those involving strategically important sectors like space and AI, can proceed with minimal regulatory interference.

Other massive private companies—Stripe, Epic Games, Databricks, Canva—have reached valuations exceeding $50 billion without going public. These companies could pursue transformative acquisitions that reshape entire industries while operating without much government oversight. This case will establish precedent for how much control regulators retain over these transactions.

SpaceX’s existing dominance in satellite deployment gives it a structural advantage that would be difficult for rivals to overcome quickly. It has launched more satellites than all other entities combined. Building comparable infrastructure would require years of development and billions in capital investment. This advantage matters greatly in determining whether space-based computing becomes competitive or controlled by one company.

Concentrating control over both space infrastructure and advanced AI development in a single entity creates potential vulnerabilities. A cybersecurity breach, operational failure, or deliberate disruption could simultaneously compromise military communications, civilian internet access, and AI capabilities that government agencies increasingly rely upon. Having multiple companies provides backup if one fails, while one company creates a critical vulnerability.

Whether current laws can handle these issues—or whether new approaches are needed—remains an open question that this deal will help answer.

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