Smart Finance APP noticed that HubSpot(HUBS.US) shares fell 12% on Wednesday after market rumors that Alphabet(GOOGL.US) would not proceed with its acquisition plans for the software company.
Alphabet had been in talks with HubSpot earlier this year, but "the two sides did not have a detailed due diligence discussion," according to a person familiar with the matter.
Regulators in the US and abroad have rejected recent deals by large technology companies. Amazon.com(Amazon.US) scrapped plans to buy iRobot, a maker of industrial vacuum robots, and Microsoft(MSFT.US) spent 20 months to close its acquisition of game publisher Activision Blizzard.
HubSpot develops software for businesses, mainly small and medium-sized enterprises, to automate marketing and customer outreach. The acquisition would help Google boost revenue from its business software, cloud infrastructure and other non-cloud businesses.
After years of heavy investment, Google's cloud computing business turned profitable in 2023.
HubSpot's growth has outpaced Google's in recent quarters, with its revenue growth rate above 20% in the past six quarters, and above 30% in the quarters prior to that. First-quarter sales rose 23% to $617.4 million.
Yamini Rangan, a former Dropbox and Workday executive, has been running HubSpot since 2021. She pointed to a challenging business environment in March and said "more proof points are needed before customers are ready to make a buying decision."
Alphabet's growth rate has never been above 20% since the beginning of 2022. Revenue grew 15% year-over-year to $80.54bn in the most recent quarter.
Google has faced regulatory scrutiny. The US Department of Justice and some state attorneys general have accused Google of violating antitrust law by entering exclusive deals with mobile phone manufacturers and web browsers to set its search engine as the default search engine for consumers.
Even after Wednesday's share price drop, HubSpot is still worth $25bn, double the size of Google's 2011 acquisition of Motorola Mobility for $1.25bn.