For a player to be victorious at the end of a video game, they usually must defeat the imposing “final boss”. It appears that Microsoft’s acquisition of gaming giant Activision has resulted in a real-life version of a final duel with the Federal Trade Commission (FTC).
The FTC’s actions to stop a proposed merger deal between Microsoft and Activision certainly risked ending the deal the same way a loss can end a game for gamers. After overcoming many challenges and gaining approval from other competition regulators around the world, a california judge took the side with the American consumer by rejecting the FTC’s argument and clearing the way for the case to be closed.
The real winner from the FTC’s defeat, however, are consumers.
In attempting to prevent the merger, the FTC had argued that the deal would harm competition in the video game industry. This aggressive attempt to stop the merger continued even after Microsoft assured regulators of the popular Call of Duty would continue its presence on competitors’ consoles, such as Sony’s PlayStation.
The court found that the FTC had failed to meet the burden of proof required to support a preliminary injunction that could halt the acquisition, which was to close by July 18. Far from seeing behavior that regulators believe could harm consumers, the court acknowledged that Microsoft”has even taken steps to extend Call of Duty to non-Microsoft platforms.”
The move echoes foreign regulators, including the strict European Union, which has already approved the acquisition. Even the UK Competition and Markets Authority, which had previously challenged the acquisition, agreed to suspend his case and negotiate with Microsoft to resolve concerns about the deal.
The gaming market remains competitive with a wide variety of options available to them. Many factors, including the availability of games, go into a consumer’s decision about their game consumption. In addition to multiple console options, the gaming ecosystem also includes PC games and an increasingly popular mobile gaming market. The Microsoft-Activision deal allows Microsoft to acquire popular franchises, including Call of Duty And candy Crushbut it will still face significant competition from Sony and Nintendo.
While this case may be the final boss this deal must defeat, it’s just the latest in a string of defeats for the FTC’s aggressive antitrust actions against major U.S. tech companies – actions that doesn’t seem to be slowing down.
Based on “the possibility that Meta’s entry will influence competition” in the virtual reality fitness space, another court, an attempt to block Meta’s acquisition of VR company Within Unlimited, rejected the agency theory of anti-competitive behavior. In 2021, the FTC unsuccessfully attempted to unwind Meta’s previously approved acquisitions of Instagram and WhatsApp (the agency was later authorized to pursue a case following an amended complaint).
Despite this growing loss record for such cases, like a video game player finding extra lives and excuses for poor performance, proponents of agency cases like to argue that these losses are in fact “gains”.
As the FTC loses in court, some members of Congress have pursued legislation that, in antitrust cases, would change the playing field for the agency in a way that no longer benefits consumers and instead favors underperforming competitors. .
In fact, Senator Amy Klobuchar recently reintroduced the American Innovation and Choice Online Act (AICOA), a bill that would target successful tech companies without the objective economic standards at the heart of today’s approach to consumer welfare. Instead of viewing antitrust laws as a way to ensure that consumers benefit from free-market competition, the FTC’s theories and Congressional proposals would allow the government to intervene much more, to dictate the outcome that judge best and use antitrust against companies or industries for political gain.
The FTC’s losses were the consumers’ gains. The good news is that courts seem to remain committed to the objective analysis at the heart of the consumer welfare standard rather than the more creative and potentially harmful theories advanced by the FTC. While this may be the final boss of the Microsoft-Activision deal, the consumer welfare standard still has many more layers to contend with.