(C) Common Dreams
This story was originally published by Common Dreams and is unaltered.
. . . . . . . . . .



Microsoft’s Activision Win Shouldn’t Stop Antitrust Reform [1]

['Dave Lee']

Date: 2023-07-11

Comment on this story Comment Gift Article Share

Federal Trade Commission Chair Lina Khan has staked her reputation on offering a novel view of antitrust policy, one that looks beyond markets as they exist today and instead considers what competitive advantages any merger might create in the years and decades ahead. Wp Get the full experience. Choose your plan ArrowRight But once again, in front of the courts, those arguments have fallen flat. On Tuesday, a federal judge in California refused to block Microsoft’s $69 billion deal to buy video-game publisher Activision Blizzard Inc., owner of Candy Crush and the bestselling Call of Duty series.

The Microsoft-Activision case is the latest in a list of recent legal setbacks for the antitrust watchdog, including an unsuccessful attempt to block Facebook parent Meta Platforms Inc. from acquiring a virtual-reality startup. Together, they are a serious blow to Khan’s efforts to rein in America’s tech giants based on her antitrust philosophy, which also holds that business monopolies can be harmful even when they don’t lead to higher prices for consumers by suppressing wages or constraining innovation. Applying this lens often means attempting to anticipate how companies and markets might behave long after deals have closed.

Advertisement

In the Activision case, the FTC had argued that the deal would give Microsoft, maker of the Xbox, an unfair advantage in the console wars and later the cloud-gaming wars because it could make top Activision games exclusive, shutting out rivals like Sony. (To assuage regulators’ concerns, Microsoft pledged to allow Sony access to Call of Duty for 10 years.)

US District Judge Jacqueline Scott Corley was unmoved by expert testimony supporting the FTC’s position. Far from proving anti-competitive behavior, the judge wrote, the evidence in court suggested the opposite: Consumers would have more ways to access Activision games than ever before.

While the deal still faces opposition from UK regulators, antitrust authorities there said after the US court ruling Tuesday that they now stand ready to hear proposals from Microsoft on how to make the deal work.

Advertisement

Khan’s appointment in 2021 was a bold move by President Joe Biden, who gave the then-32-year-old the mandate of going after big tech companies. Along with the Department of Justice, the FTC would seek to prevent or even undo the kinds of deals that helped companies like Facebook become dominant, such as its $1 billion acquisition of Instagram. In Khan’s view, regulators dropped the ball a decade ago by allowing that deal to go through.

Meta’s growth since the Instagram deal into a $760 billion social-media colossus would seem to support Khan’s view. And it’s hard to imagine that Microsoft won’t eventually try to gobble up market share in cloud gaming. When the video-game market shifts to a Netflix-style subscription model, as some have predicted, exclusivity of games will become even more important.

But it is hard to make the case that these corporate moves are breaking the law. Unless Congress adopts new antitrust statutes, Khan’s FTC stands to face this fate in court again and again.

Advertisement

For now, stopping these kinds of takeovers requires convincing judges that what might look like an unthreatening move today could in fact lock in a significant competitive advantage in the future. So far, they haven’t been convinced. Earlier this year, Meta was allowed to finalize its purchase of VR fitness app Within. There, as in the Microsoft case, the FTC was stuck arguing about the risk of dominance in a market — fitness apps in the metaverse — that didn’t yet truly exist.

But Khan has the opportunity to turn around her track record with the big one: an anticipated lawsuit against Amazon.com Inc. targeting the company’s core retail and logistics operation. The agency could file a suit this summer. The FTC is expected to argue that Amazon uses the integration of its store and logistics to punish third-party vendors that might prefer to use their own delivery operation.

The case could be different in that unlike cloud gaming, or fitness in the metaverse, the domineering presence of Amazon in retail is clear and present today. Khan’s argument that Amazon uses its warehousing and delivery network to gain an upper hand can be articulated with real-world data — not by attempting to predict the future.

Advertisement

But it’s still an uphill battle. Amazon will surely attempt to steer the debate to more traditional measures of anti-competitive behavior, such as consumer prices — which it will say have been greatly lowered — and the convenience for online shoppers of its top-to-bottom control of its store, warehouses and delivery trucks.

Amazon, buoyed by its hiring of former FTC officials to staff its policy team, will be emboldened by what it witnessed during the Microsoft case: an FTC without its ducks in a row and a judge unwilling to buy Khan’s take on anti-competitive behavior.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Dave Lee is Bloomberg Opinion’s US technology columnist. Previously, he was a San Francisco-based correspondent at the Financial Times and BBC News.

More stories like this are available on bloomberg.com/opinion

©2023 Bloomberg L.P.

Gift this article Gift Article

[END]
---
[1] Url: http://washingtonpost.com/business/2023/07/11/microsoft-s-activision-win-shouldn-t-stop-antitrust-reform/50fef44c-202d-11ee-8994-4b2d0b694a34_story.html

Published and (C) by Common Dreams
Content appears here under this condition or license: Creative Commons CC BY-NC-ND 3.0..

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/commondreams/