President Biden’s top antitrust officials have used innovative arguments to challenge tech giants and other large companies in recent years, with varying degrees of success. However, Microsoft’s recent completion of its $69 billion acquisition of video game publisher Activision Blizzard, despite a federal government challenge, sends a clear message: Big Tech can still get bigger. This outcome may prompt other tech companies to consider mergers while they can.
Microsoft’s purchase of Activision is just the latest in a series of deals that have moved forward despite challenges from the Federal Trade Commission (FTC) and the Justice Department. These agencies have been engaged in lawsuits against big tech companies, accusing them of violating antimonopoly laws. However, their efforts have been largely unsuccessful, leaving the core assumptions of antitrust law untouched.
The FTC’s questioning of the “vertical” nature of the Microsoft-Activision deal challenges the idea that mergers between non-competitors are unlikely to create monopolies. However, such “vertical” mergers have become common in the tech industry as companies like Meta, Apple, and Amazon expand into new business lines to grow and protect their empires.
The sealing of the Microsoft-Activision deal further reinforces the notion that vertical mergers are generally not anticompetitive and can proceed without significant obstacles. There continues to be a presumption that vertical integration can be a healthy phenomenon for businesses.
Despite the FTC’s ongoing challenge to the Microsoft-Activision deal, the acquisition has already closed. The FTC claims that the deal poses a threat to competition, while the Justice Department declined to comment. However, courts have been skeptical of the agencies’ claims, often ruling in favor of the merging companies due to a lack of evidence of anticompetitive harm.
While the FTC’s challenge to the Microsoft-Activision deal focused on potential harm to competition and consumers, the court ultimately ruled in favor of the merger. Microsoft’s willingness to make concessions, such as making Call of Duty available to other consoles and settling with the European Union, helped alleviate concerns about competition.
The FTC and the Justice Department have faced setbacks in their attempts to challenge vertical mergers, with judges often rejecting their efforts for lack of evidence. This has not deterred top antitrust officials like Lina Khan and Jonathan Kanter, who have demonstrated a willingness to take risks and expand the boundaries of antitrust law.
Despite the challenges faced by regulators, antitrust lawyers believe that larger companies will now feel more confident challenging regulators, knowing that mergers can still proceed. Litigation has become a necessary cost for business deals in the current regulatory environment.
Overall, Microsoft’s acquisition of Activision underscores the continued growth potential of Big Tech through mergers and acquisitions. As tech companies become even more massive, regulators will need to carefully choose cases they can prove with an abundance of evidence to challenge vertical mergers successfully.
Unique Perspective:
The Microsoft-Activision deal highlights the evolving landscape of antitrust regulation and its impact on the tech industry. As Big Tech companies continue to grow and expand through mergers and acquisitions, the challenges faced by regulators will shape the future of competition and innovation. The ability of companies like Microsoft to navigate regulatory obstacles and complete such massive deals demonstrates the influence and power they hold in shaping the industry. This acquisition not only solidifies Microsoft’s position in the gaming market but also raises questions about the potential for further consolidation and the implications for competition and consumer choice. The role of regulators in overseeing these mergers and enforcing antitrust laws will be crucial in ensuring a level playing field and promoting a healthy marketplace for technological advancements.
