Did the FTC Lie About Microsoft? (Premium)

In announcing that it would sue to block Microsoft’s acquisition of Activision Blizzard, the FTC cited a previous incident in which Microsoft had allegedly deceived EU regulators. Microsoft says it never happened. And now the EU has gone on record. And … it’s a bit nuanced.

To recap, the FTC complained that Microsoft gaining control of “top video game franchises” would enable it to “harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content.” Its proof, despite the ongoing assurances from Microsoft that it makes no sense to do any of that, is simple enough. Microsoft, the FTC, claimed, had already lied to “European antitrust authorities” and has a “record of acquiring and using valuable gaming content to suppress competition from rival consoles.”

I know. What? Here’s the key bit of the complaint.

“Microsoft decided to make several of Bethesda’s titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles,” the FTC explains. And that event justified the comments attributed to Holly Vedova, the Director of the FTC’s Bureau of Competition. “Microsoft has already shown that it can and will withhold content from its gaming rivals,” she said.

From there, the complaint is just a bunch of “what ifs,” speculation about what Microsoft could do. None of that makes any sense, but the FTC is trying to make the improbable sound more possible by showing prior behavior. Microsoft’s done it before, folks. It will do so again.

But did that ever happen? The EU says no … sort of.

“Microsoft did not offer any commitments to the Commission,” a representative of the European Commission told Axios on the record. “The Commission cleared the Microsoft/ZeniMax transaction unconditionally as it concluded that the transaction would not raise competition concerns.”

Put another way, the EU approved Microsoft’s acquisition of ZeniMax (Bethesda) regardless of any plans it may or may not have to pull particular game titles away from rival consoles. But it never made the assurances that the FTC now claims it did, and so Microsoft did not lie to the EU regulators.

I briefly considered that perhaps the FTC had purposefully used the term “European antitrust authorities” because it wasn’t referring to the EU’s European Commission, but rather to the UK’s Competition and Markets Authority. But if you look at the actual legal filing, the FTC does, in fact, specify that “Microsoft assured the European Commission during its antitrust review of the ZeniMax purchase that Microsoft would not have the incentive to withhold ZeniMax titles from rival consoles,” and that “after the EC cleared the transaction, Microsoft plans for three of the newly acquired titles to become exclusive to Microsoft’s Xbox consoles and Xbox Game Pass subscription services.”

Microsoft did make three of the newly acquired ZeniMax titles Xbox exclusives, though none could be characterized as AAA titles. But Microsoft says it never made any assurances to the contrary. And now the EC says that Microsoft never made any assurances either. And that even if it had, that wouldn’t have factored into its decision.

So what are we to make of the FTC complaint? On the one hand, Microsoft did engage in the behavior that it now says it will not do in the wake of an Activision Blizzard acquisition, albeit with relatively minor titles. But it never lied to regulators as the FTC claims. And so the FTC’s fears about Microsoft becoming a repeat offender by later making some Activision Blizzard games Xbox-only, especially high profile and popular games, seem a bit more fanciful. That’s especially true when you consider that all Microsoft has to do is reach an explicit, legally-binding agreement with the FTC and other regulators that it will not do so. This is not a high bar.

Accusing Microsoft of lying is not a good look, especially when the party it allegedly lied to denied it ever happened. But it’s fair to hold Microsoft and this acquisition to a reasonable standard. And I still feel like the necessary compromise is obvious.