A Tale of Two (OK, Three) Antitrust Regulators (Premium)

The U.S. Federal Trade Commission (FTC) and UK Competition and Markets Authority (CMA) were both embarrassed in recent weeks by Microsoft when their justifications for blocking the Activision Blizzard acquisition were exposed as irrational nonsense. And both regulatory bodies have been forced to scramble to reach a settlement with the software giant that will help them save face by appearing to do their jobs while succumbing to their inevitable defeats. In the wake of these defeats, it’s interesting to see representatives from each agency discuss what happened publicly.

First, let’s recap what happened. Because I’ve argued these points so many times, I’ll just summarize them here.

In the U.S., the FTC was given the mandate to rein in Big Tech at all costs by the Biden administration and thus blocked the acquisition in December 2022 because Microsoft “can and will withhold content from its gaming rivals,” a practice those dominant rivals do exponentially more often, specifically Call of Duty, a title that Microsoft promised to both of those rivals for 10 years. Despite the “economically irrational” nature of this argument, the FTC engaged in a series of legal hearings to press its case, losing handily when a federal judge reviewed its non-existent evidence. “Despite the completion of extensive discovery in the FTC administrative proceeding, including the production of nearly 1 million documents and 30 depositions, the FTC has not identified a single document which contradicts Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch),” she wrote. There is a lot more to this, but today Microsoft and the FTC are negotiating a settlement.

In the UK, the CMA blocked the acquisition in April on the basis that Microsoft, an also-ran in the console market and a non-entity in mobile gaming, might someday dominate a non-existent market for game streaming, despite the fact that its service is only made available as a perk of another online service because it is technically unviable on its own and likely always will be. But after the FTC lost, the CMA engaged in an almost comical series of backtracking, with the end result that it, like the FTC, is now talking to Microsoft again and trying to reach terms that are acceptable to both sides.

Since these historic and unprecedented defeats, representatives from both agencies have emerged into the light and have discussed what happened. And while there isn’t a lot to work with here, I find their respective summaries of their defeats to be interesting.

FTC commissioner Lina Khan, fairly or not, is widely criticized for not choosing her regulatory actions more selectively, and it’s probably fair to say that her inexperience has led to some bad decisions. As I opined in the wake of last December’s FTC decision, it is astonishing that this agency would pursue this legally defensible acquisition using imaginary worries abo...