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Reuters
Reuters
NEW YORK (Reuters Breakingviews) – Facebook is Microsoft’s antitrust boogeyman. The U.S. regulatory agency, the Federal Trade Commission, is seeking to block the software titan’s $69 billion deal for gaming giant Activision Blizzard, partly to stop domination of the industry as it evolves. The FTC’s leader Lina Khan might be making up for regulators who waved through Mark Zuckerberg’s $1 billion purchase of Instagram. Though Microsoft’s deal is different, punishment under Khan’s regime seemed inevitable.
The FTC is concerned that Microsoft, the owner of the Xbox gaming console, will withhold popular games made by Activision including “Call of Duty” and “World of Warcraft” from competing platforms including Sony’s PlayStation and Nintendo’s Switch. Microsoft has tried to appease 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 happens after that. Microsoft could try to corner the market by forcing consumers to not only buy the Activision games from Microsoft, but the platform as well. It’s not a stretch either. Outlook, Teams, and other Microsoft operating systems are now all a crucial part of daily life that enterprises buy collectively, not to mention the $1.8 trillion giant’s cloud capabilities.
Still, how the future shakes out for the gaming business is anyone’s guess. Microsoft’s rationale for buying Activision is to better compete in the gaming market against the likes of Tencent and others. Online gaming has few barriers to entry, and consoles are going the way of Atari. Streaming is the future, and in that way, Microsoft could easily be sidelined in the business if it doesn’t innovate.
Khan has vowed to rethink the way antitrust laws are applied. The agency is seeking to reconsider concentration thresholds to be adjusted to consider “alternative metrics” and “qualitative factors” beyond market share. That requires regulators to imagine harms that may not yet exist.
Zuckerberg and the year 2012 loom large in that sense. That’s when Meta Platform’s Facebook bought Instagram, then a much smaller rival. The threat of dominance was hard to see. But that transaction, small as it was, turned out to catapult Facebook into one of the world’s largest beneficiaries of digital ad dollars. Khan may be thinking ahead. But it’s the ghost of Facebook that is haunting Microsoft.
Follow @jennifersaba on Twitter
CONTEXT NEWS
The U.S. Federal Trade Commission on Dec. 8 sued to block Microsoft’s $69 billion acquisition of video-game developer Activision Blizzard, arguing that the combination would hurt consumers because it would give the software company an unfair edge against competitors of its Xbox gaming consoles and cloud-gaming business.
Microsoft President Brad Smith tweeted, “We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers.”
(Editing by Lauren Silva Laughlin and Amanda Gomez)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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