The regulator’s attempt to stop the purchase of Activision aims to prevent a dominance like Facebook’s
Facebook is Microsoft’s antitrust bogeyman. The US regulatory agency, the Federal Trade Commission (FTC), is trying to block the software titan’s $69 billion deal with video game giant Activision Blizzard, in part to curb its dominance. of the industry. FTC leader Lina Khan may be making up for regulators’ decision to approve Mark Zuckerberg’s $1 billion purchase of Instagram. Although the Microsoft deal is different, punishment under the Khan regime seemed inevitable.
The FTC is concerned that Microsoft, which owns the Xbox video game console, is preventing popular games created by Activision, such as Call of Duty and World of Warcraft, from being used on competing platforms such as the Sony PlayStation and Nintendo Switch. Microsoft has tried to allay this concern. This month, the company led by Satya Nadella agreed to offer games to Nintendo and Sony for 10 years.
The question is what will happen next. Microsoft could try to corner the market by forcing consumers to buy not just Activision’s games from Microsoft, but the platform as well. It’s not unreasonable either. Outlook, Teams and other Microsoft operating systems are now a crucial part of daily life that businesses collectively buy, not to mention the $1.8 trillion giant’s cloud capabilities.
Still, no one knows what the future looks like for the video game business. Microsoft’s reason for buying Activision is to better compete in the gaming market against companies like Tencent. Online gaming has low barriers to entry, and consoles are going the way of Atari. Streaming is the future, and in that sense, Microsoft could easily be put out of business if it doesn’t innovate.
Khan has vowed to rethink the way antitrust laws are enforced. The agency intends to reconsider the concentration thresholds to adjust them to consider “alternative metrics” and “qualitative factors” beyond market share. This forces regulators to imagine harms that may not yet exist.
Zuckerberg and the year 2012 are important in that sense. That’s when Facebook, from the Meta platform, bought Instagram, then a much smaller rival. The dominance threat was hard to see. But that transaction, small as it was, ended up catapulting Facebook as one of the world’s biggest recipients of digital ad money. Khan may be thinking ahead. But it is the ghost of Facebook that haunts Microsoft.
