Key Takeaways
- Speculative M&A discussions, while useful thought experiments, often overlook significant operational, financial, and regulatory hurdles that render them improbable.
- An Uber acquisition of Rivian appears strategically flawed; Uber has divested from autonomous vehicle development and is now focused on platform profitability, making Rivian’s substantial cash burn an indigestible liability.
- A Microsoft purchase of Okta makes immense strategic sense, creating a dominant force in enterprise identity. However, it would almost certainly be blocked by regulators on antitrust grounds in the current enforcement climate.
- The more probable M&A path for these giants involves smaller, targeted acquisitions that fill specific capability gaps rather than large, transformative, and high risk mergers.
Corporate dealmaking speculation often provides a fascinating lens through which to view market strategy, revealing perceived weaknesses and ambitions. A recent list of hypothetical mergers from market analyst Shay Boloor included two particularly notable pairings: Uber acquiring the electric vehicle manufacturer Rivian, and Microsoft absorbing the identity management specialist Okta. While both propositions possess a certain superficial logic, a deeper analysis reveals that one is strategically questionable and the other is regulatorily untenable, highlighting the immense gap between a sensible idea and an executable transaction.
Examining these potential deals reveals the complex interplay between vertical integration ambitions, balance sheet realities, and an increasingly aggressive global regulatory environment. For investors, understanding these barriers is crucial to distinguish between imaginative market chatter and genuinely plausible corporate action.
Uber and Rivian: A Merger of Convenience or Confusion?
The suggestion that Uber might acquire Rivian is rooted in an understandable desire to solve Uber’s most significant long term challenge: securing a cost effective and scalable supply of electric vehicles for its network. With regulatory deadlines approaching for fleet electrification in key markets, taking control of a manufacturer seems like a direct solution. However, this line of reasoning unravels under closer scrutiny.
The Flawed Strategic Premise
The primary flaw in this thesis is that it misreads Uber’s current corporate strategy. After years of prioritising growth at any cost, Uber has pivoted decisively towards profitability and capital efficiency. The company reported its first full year of GAAP operating profit in 2023 and has continued this trend into 2024, a hard won achievement it is unlikely to jeopardise.1 Acquiring Rivian would mean absorbing a business that is, to put it mildly, haemorrhaging cash.
| Metric | Uber Technologies, Inc. | Rivian Automotive, Inc. |
|---|---|---|
| Market Capitalisation (Approx. Nov 2024) | $140 billion | $11 billion |
| Q2 2024 Revenue | $10.13 billion | $854 million |
| Q2 2024 Net Income / (Loss) | $335 million | ($1.19 billion) |
Source: Company quarterly earnings reports.
Furthermore, the notion that this purchase would allow Uber to “take control of its autonomy roadmap” ignores recent history. Uber abandoned its own expensive and troublesome autonomous vehicle research by selling its Advanced Technologies Group (ATG) to Aurora in 2020.2 The company’s current strategy is one of partnership, exemplified by its integration of Waymo’s autonomous vehicles onto its platform. To reverse course and take on the monumental expense of both vehicle manufacturing and autonomy research simultaneously seems deeply improbable.
Finally, any deal would be complicated by Rivian’s foundational agreement to supply 100,000 electric delivery vans to Amazon, its largest commercial customer and a significant shareholder. Unwinding or navigating this relationship would present a formidable challenge. A more likely path for Uber is to continue leveraging its scale to secure favourable supply agreements with multiple established automakers, a capital light strategy that aligns with its current focus on platform economics.
Microsoft and Okta: A Regulatory Nightmare
Unlike the Uber-Rivian idea, the strategic case for Microsoft acquiring Okta is exceptionally strong. Microsoft’s Azure cloud platform is an enterprise behemoth, and its own identity solution, Entra ID (formerly Azure Active Directory), is a core component. Okta is widely recognised as the best of breed independent leader in Identity and Access Management (IAM), particularly for its user friendly single sign on and multi factor authentication solutions that connect applications across different clouds.3
An Identity Superpower
Combining the two would create an unassailable force in enterprise identity. Microsoft could integrate Okta’s technology to fortify its position in multi cloud environments, making Azure the default identity fabric for organisations regardless of where their applications reside. Given that identity is the new security perimeter, this would be a powerful competitive advantage, creating a deep and enduring moat around Microsoft’s enterprise ecosystem. For Microsoft, whose cash reserves are vast, Okta’s market capitalisation of approximately $16 billion would be a trivial expense.4
The problem is not one of strategy or finance, but of regulation. In the current environment, where regulators in the United States and Europe are actively looking to curtail the power of Big Tech, a deal of this nature would face insurmountable antitrust hurdles.5 Competitors would argue, with considerable justification, that it would give Microsoft an unfair advantage, allowing it to preference its own services and potentially lock customers into its ecosystem. The failed Adobe acquisition of Figma serves as a recent, potent example of regulators blocking a deal that sought to combine a dominant platform with a leading independent tool.
While Okta has faced its own challenges, including damaging security breaches that have impacted customer trust, this would likely not be enough to secure regulatory approval. The deal is, in short, a textbook case of a transaction that makes perfect sense in a boardroom but stands almost no chance of surviving contact with the Department of Justice or the European Commission.
Conclusion: Distinguishing Plausible from Merely Possible
The exercise of imagining these large scale mergers is valuable, but ultimately underscores a more sober reality. The era of unchecked, blockbuster tech acquisitions may be drawing to a close, constrained by both intense regulatory scrutiny and a renewed focus on capital discipline. While the Microsoft-Okta combination is strategically coherent, it is a non starter in today’s political climate. The Uber-Rivian pairing, on the other hand, appears strategically confused, running counter to Uber’s operational priorities and financial discipline.
A more realistic forward looking hypothesis is that M&A activity for these giants will be concentrated on smaller, ‘tuck in’ acquisitions. Rather than buying an entire car company, Uber is more likely to acquire technology firms that enhance its logistics software or driver engagement tools. Similarly, Microsoft will likely continue to purchase smaller cybersecurity or AI firms that fill specific capability gaps within its sprawling portfolio, rather than attempting to buy its largest direct competitor in a critical growth market. For now, these grand mergers remain firmly in the realm of speculative fiction.
References
1. Uber Technologies, Inc. (2024). Uber Announces Results for Second Quarter 2024. Retrieved from Uber Investor Relations.
2. Uber Technologies, Inc. (2020, December 7). Uber Announces Agreement to Sell ATG to Aurora and Strategic Partnership [Press release]. Retrieved from Uber Investor Relations.
3. Okta, Inc. (2024). Okta Announces Second Quarter Fiscal Year 2025 Financial Results. Retrieved from Okta Investor Relations.
4. Microsoft Corporation. (2024). Earnings Release FY24 Q4. Retrieved from Microsoft Investor Relations.
5. EY. (2024). Why an M&A rebound in 2024 will depend on building trust. Retrieved from EY.com.
6. Boloor, S. [@StockSavvyShay]. (2024, October 15). [10 M&A DEALS THAT WOULD JUST MAKE SENSE IN 2025]. Retrieved from https://x.com/StockSavvyShay/status/1846200216149209503
