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Why The FTC Is Singling Out Microsoft In Activision-Blizzard Battle – TheFantasyTimes

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By Nikita Gambhir

Why The FTC Is Singling Out Microsoft In Activision-Blizzard Battle



The ongoing clash between the Federal Trade Commission (FTC) and Microsoft regarding Microsoft’s planned acquisition of Activision-Blizzard holds greater significance than most people realize. This legal dispute deviates from the FTC’s traditional behavior, and its outcome could set a precedent for future interactions between major tech companies and antitrust regulators. The business world is closely observing this case.

Historically, the FTC has followed the “consumer welfare” standard of antitrust, which implies that if an acquisition is not expected to impact product prices, then there is no issue. However, this approach has changed since Joe Biden appointed Lina Khan as the chair of the FTC. At just 34 years old, Khan is the youngest person ever to hold this position. She gained attention during her time as a law student when she argued that Amazon was a monopolistic entity in a 2017 article. Khan subsequently worked for Congress, academia, and a think-tank before assuming her current role.

Another notable figure within the FTC, Jonathan Kanter, was also appointed by the Biden administration. Kanter, who has previously challenged Google, leads the Commission’s antitrust division. The administration’s intention was clear: the FTC would adopt a tougher stance on big business, particularly in the tech sector. Khan and her colleagues have reshaped the FTC’s perspective. Instead of solely considering price implications, they are now evaluating other potential harms, such as the adverse effects on labor and small businesses resulting from market consolidation. Their focus is on preventing major companies from impeding the emergence of new competitors through market dominance. This was Khan’s justification for her unsuccessful attempt to challenge Meta’s acquisition of Within, a promising virtual reality fitness company. The court denied the FTC’s request for an injunction, allowing the acquisition to proceed.

In contrast, the Microsoft acquisition would likely have faced no opposition before Khan’s tenure, but it has now become a major concern for the Commission. For the past year, the FTC’s primary worry has been the exclusivity of Call of Duty on the Xbox platform. The Commission fears that an Xbox-exclusive Call of Duty could harm competition within the video game industry. Additionally, there are concerns about the future of Game Pass, which has the potential to become a dominant cloud gaming service. The FTC is apprehensive that the combination of Game Pass and the Activision-Blizzard deal’s game library would make Microsoft an unbeatable leader in cloud gaming.

Although Phil Spencer, the head of Xbox, has repeatedly expressed his willingness to negotiate with PlayStation to keep Call of Duty on their platform for at least ten years, the FTC remains skeptical. The Commission points to Microsoft’s acquisition of ZeniMax as evidence of its antitrust behavior, as games like Redfall and Starfield have become exclusive to Xbox. However, the government’s case may face challenges. Microsoft currently holds third place in the console market, trailing behind Sony and Nintendo. Furthermore, a combined Microsoft-Activision-Blizzard is estimated to generate only 14% of global gaming revenue. If Xbox can reach a legal agreement with Sony regarding Call of Duty, the judge may not see sufficient evidence to grant the FTC’s desired injunction.

Currently, US District Judge Jacqueline Scott Corley is deliberating on whether to issue a preliminary injunction to halt the deal. Microsoft and Activision-Blizzard have agreed that if the deal is not finalized by July 18, it will be terminated. Judge Corley has not specified a firm date for her decision but is mindful of the timeline. This is a pivotal moment for Khan and her like-minded colleagues at the FTC. If the injunction is granted, it will be viewed as a significant victory for antitrust efforts. Conversely, if Judge Corley rules otherwise, it will be another setback for the FTC, potentially undermining the credibility of future antitrust cases.

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The ongoing battle between the Federal Trade Commission (FTC) and Microsoft over the latter’s planned acquisition of Activision-Blizzard is more important than most people realise.



This legal challenge is not traditional behaviour from the FTC, and the conclusion of the case could be indicative of future interactions between big tech and antitrust regulators. Corporate America has its eyes on this case.

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Traditionally, the FTC has tended to abide by the “consumer welfare” standard of antitrust. Essentially, this means that if an acquisition isn’t predicted to affect the price of products, then there isn’t a problem. This attitude changed with Joe Biden’s appointment of Lina Khan (34) as chair of the FTC, the youngest ever to hold the role.


Khan earned some notoriety as a law student for a 2017 article in which she argued that Amazon was a monopolist. She then went on to work for Congress, in academia, and for a think-tank before taking on her current role.

FTC Chair Lina Khan
Lina Khan

Another prominent figure in the FTC, Jonathan Kanter, was also appointed by the Biden administration. Kanter, who has previously fought Google, heads up the Commission’s antitrust division. The signal from the administration was clear: the FTC was going to be harder on big business, especially in tech.

Khan and her colleagues have reframed thinking at the FTC. Rather than just looking at price implications, other harms are also being considered, like the potential damage to labour and small businesses caused by market consolidation. There is a particular interest in ensuring big companies can’t stop new competitors from emerging through market dominance. This was Khan’s rationale for her unsuccessful challenge to Meta’s acquisition of Within, a budding virtual reality fitness company. A judge refused the FTC’s request for an injunction and the acquisition proceeded.

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So, while the Microsoft acquisition would’ve likely proceeded without challenge prior to Khan’s tenure, it has now become a bugbear for the Commission. As we’ve heard continuously for the past year, the FTC’s primary concern is the exclusivity status of Call of Duty. The Commission worries that an Xbox exclusive Call of Duty will harm competition in the video game industry.

There is also concern regarding the future of Game Pass, which could potentially burgeon into a dominant cloud gaming service. The FTC worries that the future of Game Pass combined with the library of games provided by the Activision-Blizzard deal will make Microsoft an unassailable leader in cloud gaming.

Call of Duty Warzone art

Of course, Phil Spencer has said numerous times that he’s willing to work out a deal with PlayStation to keep Call of Duty on the platform for at least a decade. The problem? The FTC doesn’t believe him. The Commission has cited Microsoft’s acquisition of ZeniMax as an example of its antitrust behaviour, with games such as Redfall and Starfield becoming Xbox exclusives.

The government’s case may be struggling, however. Microsoft is in third place in the console market behind Sony and Nintendo, a combined Microsft-Activision-Blizzard is estimated to only earn 14% of global gaming revenue, and if Xbox can come to a legal arrangement with Sony regarding Call of Duty, then the judge may not see strong enough evidence to provide the FTC with the injunction they desire.

As it stands, US District Judge Jacqueline Scott Corley is deciding whether to grant a preliminary injunction to halt the deal. Microsoft and Activision-Blizzard have essentially agreed that if the deal isn’t done by July 18, then it will be terminated. Judge Corley has said she doesn’t have a firm date for her decision, but she is mindful of the timeline.

This is a big moment for Khan and her like-minded colleagues at the FTC. If granted the injunction, it will be seen as a great antitrust victory. If Judge Corley decides otherwise, it will be another defeat for the FTC and unfortunately for antitrust, continuously losing cases can damage any legal cause.

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