Money & The Economy

Microsoft’s Massive $68 Billion Deal Risks Antitrust Danger As Regulators Promise Crackdown

  • Microsoft’s $68 billion acquisition of video game company Activision will likely attract scrutiny from regulators, experts say, as the antitrust authorities look to crack down on anticompetitive behavior in technology markets.
  • Both FTC Chairwoman Lina Khan and DOJ Assistant Attorney General Jonathan Kanter have pushed for more aggressive scrutiny of large mergers and acquisitions, particularly in technology markets, and Microsoft’s massive purchase is likely to draw their attention. 
  • “It would be surprising to me if they didn’t take a careful look,” Matt Stoller, director of research at the American Economic Liberties Project, told the Daily Caller News Foundation.
  • The deal has also attracted the attention of lawmakers looking to strengthen antitrust enforcement against tech companies.
  • “Given Microsoft’s history of antitrust violations, I hope antitrust regulators take a very careful look at this merger, which my legislation would ban,” Republican Sen. Josh Hawley told the DCNF.

Microsoft’s $68 billion acquisition of video game company Activision will likely attract scrutiny from regulators, experts say, as antitrust authorities look to crack down on anticompetitive behavior in technology markets.

Microsoft announced the all-cash purchase early Tuesday which, if completed, would make the tech giant the world’s third-largest gaming company behind only Tencent and Sony, giving it ownership over some of the world’s most prominent gaming properties.

The announcement came just hours before the Federal Trade Commission (FTC) and the antitrust division of the Department of Justice (DOJ) held a joint press conference promising to revise merger guidelines and strengthen enforcement of antitrust law against illegal acquisitions.

Both FTC Chairwoman Lina Khan and DOJ Assistant Attorney General Jonathan Kanter have pushed for more aggressive scrutiny of large mergers and acquisitions, particularly in technology markets, and Microsoft’s massive purchase is likely to draw their attention. Kanter previously represented Microsoft in antitrust suits against other tech giants during his time in private practice.

“It would be surprising to me if they didn’t take a careful look,” Matt Stoller, director of research at the American Economic Liberties Project, told the Daily Caller News Foundation.

The deal would hand Microsoft, which already distributes the Xbox console and operates the Game Pass online gaming service, ownership over some of the most popular gaming franchises, including Call of Duty, Candy Crush, and World of Warcraft, according to the announcement.

“Recent actions by the antitrust agencies in the U.S., but also recent, unprecedented aggressive actions abroad, including in EU and the U.K., probably suggest the agencies will take a close look at the transaction,” former Justice Department antitrust chief Makan Delrahim told The Wall Street Journal.

The deal has also attracted the attention of lawmakers looking to strengthen antitrust enforcement against tech companies.

“Given Microsoft’s history of antitrust violations, I hope antitrust regulators take a very careful look at this merger, which my legislation would ban,” Republican Sen. Josh Hawley told the DCNF.

Hawley has introduced several bills taking aim at mergers and acquisitions by large tech giants, and is a current proponent of Senate antitrust legislation targeting Apple, Amazon, Google and Facebook.

Republican Rep. Ken Buck said that, while the deal could risk antitrust scrutiny, he believes it will ultimately work to strengthen competition in the gaming market.

“They’ve suggested that they’re going to emphasize access to titles and competition in the marketplace as well as the individual gaming experience,” Buck told the DCNF. “If the company keeps its word, I believe that the increase in competition in the gaming marketplace would be in keeping with the aims of my legislation, the Open App Markets Act.”

Buck, who co-sponsored a series of antitrust bills taking aim at Big Tech, added that he received assurances on the matter from Microsoft, which he called “encouraging.”

The merger also includes a $3 billion dollar fee that Microsoft will have to pay Activision should the acquisition not go through, Reuters reported, which Stoller said was in anticipation of regulators killing the deal.

“Usually when there’s a breakup fee like that, it’s when the parties know there’s legal risk,” he said.

Should the deal be completed, Microsoft’s Game Pass will be able to attract a much wider user base which may put Microsoft in regulators’ crosshairs, business attorney Richard Hoeg told GameSpot.

“Microsoft has made clear its intentions to use this deal to buoy Game Pass and cloud offerings which, as they stand today, are a much more narrow market that a motivated regulatory body might decide is harmed by acquisitions of this size,” Hoeg said.

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Ailan Evans

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Ailan Evans

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