The Trump administration has a new way to pressure companies to ditch DEI

New York (CNN) — Wall Street cheered President Donald Trump’s election because businesses expected a massive deregulation effort. Trump knows this — and his administration appears to be leveraging that to get something in return: rollbacks of companies’ diversity, equity and inclusion policies.

The federal government typically tries to block corporate mergers if they will harm competition or raise prices for customers. The Biden administration blocked a number of high-profile mergers and acquisitions, much to the dismay of corporate America.

The Trump administration is threatening to block deals, too — but for a different reason: punishing companies that promote DEI.

Brendan Carr, the Trump-appointed chairman of the Federal Communications Commission, said the FCC will block mergers and acquisitions from media companies that promote DEI policies.

“Any businesses that are looking for FCC approval, I would encourage them to get busy ending any sort of their invidious forms of DEI discrimination,” Carr said in an interview with Bloomberg Friday.

Federal regulators have never before tried to block mergers because of companies’ human resource policies, legal experts and advocacy groups say. Carr’s threat is the latest way the Trump administration is trying to push companies to abandon their diversity programs.

“There are many good reasons to block a media merger: for example, preserving competition, or preventing higher prices and job cuts. A company’s programs designed to promote diversity, equity and inclusion obviously don’t make that list,” Craig Aaron, the co-CEO of public interest group Free Press, said in a statement.

DEI in the workplace is generally a mix of employee training, resource networks and recruiting practices. The goal is to advance representation of different races, genders and classes, people with disabilities, veterans and other underrepresented groups. The Trump administration has said DEI is “illegal and immoral discrimination,” blaming DEI for a plane crash in Washington, D.C. and the spread of wildfires in California.

The FCC licenses airwaves for broadcast television, radio, cable and other communications networks around the country. The Communications Act of 1934 requires that licensees operate in the “public interest, convenience and necessity,” and the FCC can sue to block mergers that it believes do not advance the “public interest.”

This merger review standard has always been malleable, but the FCC has long interpreted it to block mergers that it believes harms market competition. For example, the Obama administration’s FCC opposed a deal between Comcast and Time Warner in 2014 over concerns it would create a monopoly.

But Carr signaled that mergers between companies with DEI policies do not meet the “public interest” standard and threatened to block them.

“We can only under the statute move forward and approve a transaction if we find that doing so serves the public interest,” he said. “If there’s businesses out there that are still promoting invidious forms of DEI discrimination, I really don’t see a path forward where the FCC could reach the conclusion that approving the transaction is going to be in the public interest.”

Legal experts said they were unclear what exactly Carr was referring to when he warned the FCC wouldn’t tolerate “invidious” DEI efforts or which DEI programs are unlawful. But Carr’s message has enormous stakes for pending and future mergers and acquisitions in the communications sector. He specifically mentioned Paramount’s merger with Skydance, and Verizon’s acquisition of Frontier. The FCC has also ordered an investigation into Comcast’s DEI practices.

Tom Wheeler, the FCC chair from 2013 to 2017 during the Obama administration, said Carr is overstepping the FCC’s authority by threatening to block deals because he opposes companies’ diversity policies.

“The chairman is exercising rogue power to personalize just what the public interest is,” Wheeler said. “This is a get-right with the chairman. And he never defines what get-right means.”

The FCC did not respond to this criticism or CNN’s questions on the definition of “invidious forms” of DEI.

Confusion for companies

Carr also said he met with right-wing activist Robby Starbuck, who has launched pressure campaigns on social media against companies like Tractor Supply and John Deere to push them to drop DEI policies.

“I want to congratulate @robbystarbuck for the success he’s had ending DEI across corporate America,” Carr said on X Friday. “And I want to thank Robby for sharing his insights and expertise with me and my team as the FCC works to root out this invidious form of discrimination.”

The Trump administration has dismantled DEI efforts in the federal government, and companies face significant pressure to change or abandon their policies from the administration. Trump signed an executive order threatening federal investigations for “illegal DEI,” and Attorney General Pam Bondi issued a memo promising that the Department of Justice would enforce these efforts, including criminally.

Many companies see DEI as good for their businesses and are caught between pursuing these goals and avoiding scrutiny from the Trump administration.

Companies are uncertain which of their DEI programs constitute “illegal DEI” and have been scrambling to review or change their policies to avoid possible scrutiny from the administration. Meta, Amazon, McDonald’s, Goldman Sachs and other companies have changed or rolled back their DEI policies in recent months.

Carr’s message adds to companies’ confusion, said Aaron Goldstein, an attorney at Dorsey & Whitney.

“Threatening to block mergers between companies that engage in DEI is just one more vehicle for creating risk for companies,” Goldstein said.

And by not defining for companies what “invidious DEI” means, the uncertainty Carr’s message creates is the point, Goldstein said.

“This creates a substantial chilling effect because companies don’t know what is or isn’t legal from the administration’s perspective,” he said. “If they want to avoid investigations and possible litigation, they need to ditch anything conceivably associated with DEI.”

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