In Microsoft's current high-stakes gambit to acquire gaming leader Activision, the software giant has offered justifications that should make free marketeers the world over applaud.
“Giving consumers high-quality content in more ways and at lower prices is what the antitrust laws are supposed to promote, not prevent,” said the software giant, responding to US and British regulatory bodies critical of its $69 billion proposed acquisition.
Back in December, Microsoft President Brad Smith made this case to the Federal Trade Commission, which promptly thanked Mr. Smith for his time by suing his company. Microsoft is not unique: Under the leadership of activist academic Lina Khan, the Commission has regularly attacked private businesses that have the temerity to try and merge with or acquire competitors.
The company has had more luck overseas. Last month, Microsoft and Activision presented to the European Commission in support of their proposed deal. They were joined in this support by strange bedfellows, including the labor union Communications Workers of America. Reuters reported that the Commission is expected to grant its approval of the deal next month.
Not everyone is thrilled: Britain’s Competition and Markets Authority (the British equivalent of the FTC) released a report critical of the merger, echoing similar concerns as the FTC. But perhaps the loudest critic is Sony, whose PlayStation platform has an estimated 70 percent of the global video game market share over Microsoft/Xbox’s 30 percent.
Sony raised several hypothetical concerns about the merger. Most recently, it suggested—without evidence--that Microsoft could intentionally release a flawed version of the popular Call of Duty video game for PlayStation, while releasing an optimized version for Microsoft-owned Xbox. (News reports suggest Sony's CEO may have other motives in his opposition.)
To make progress, Microsoft and Activision must convince their critics that today’s competitive landscape reaches far beyond domestic borders, a single platform or a single game franchise like Call of Today. That should be self-evident: The biggest gaming segment today is mobile, fueled by powerful handsets, and availability of diverse content for demographically and geographically diverse audiences. Three of the top-five grossing mobile games in 2022 were owned by Chinese companies.
The merger would be a win-win for two US companies facing this competitive landscape, and downstream for gaming consumers. Microsoft has almost no footprint in the digital space while Activision Blizzard doesn’t have its own gaming consoles. The acquisition would almost-certainly lead to a better gaming experience — and entirely new and enhanced content — for customers.
Don’t take my word for it, though. One of the most convincing factors to refute that consumers would be harmed come from a survey of the general public the Competition and Markets Authority conducted back in October. Here, an overwhelming percentage (75%) of respondents were in favor of the deal.
No one, certainly not government regulatory watchdogs, can predict the future of gaming. This merger is about giving all companies the resources and tools to hold their own in an intensely innovative and competitive marketplace. The FTC and CMA should let this merger go through.
