Are the British Doing Lina Khan's Dirty Work?

Federal Trade Commission Chair Lina Khan is one of the most controversial of all of President Biden’s appointments. This is in large part because of her “holistic” approach to antitrust enforcement, meaning that antitrust should serve as a vehicle for federal bureaucrats and prosecutors to expand government control to almost every part of the economy. Khan’s radical agenda has led her to bring many lawsuits of questionable merit.

One of the questionable lawsuits brought by the FTC under Khan’s reign seeks to block the merger of computer giant Microsoft and video game manufacturer Activision. This is an odd acquisition to target since even if Microsoft acquired Activision it would not be the dominant company in the video game market—that position would still belong to Sony.

The FTC’s justification for seeking to stop Microsoft from acquiring Activision is that Activision makes some of the most popular video games, including Call of Duty. The FTC has expressed concerns that Microsoft wants to acquire Activision in part to stop Activision from producing versions of their popular games that are compatible with Sony video game consoles, or at least make the Sony-compatible version inferior to the ones made for Microsoft consoles.

In order to make that argument, the FTC must ignore the revenue Microsoft would lose if it stopped Activision from making versions of its games compatible with the leading video console on the marketplace. It also ignores the fact that no one knows who is going to create the next big game. If Microsoft stops making popular games available to other consoles—or makes an inferior version of its games available—then its competitors will likely retaliate by refusing to make their popular games useable on Microsoft consoles.

Contrary to what Lina Khan seems to believe, Microsoft has plenty of incentives to continue allowing Sony and other companies access to Activision’s’ popular games. In fact, Microsoft has agreed to sign a 10-year agreement to not monopolize Call of Duty or other popular games if they acquire Activision.

The UK’s antitrust agency, the Competition and Markets Authority (CMA), seems to disagree with the FTC on the Microsoft merger. In March, CMA announced its conclusion that there was no evidence Microsoft would restrict access to Activision’s games. But interestingly, last month CMA rejected the merger on the grounds that Microsoft would restrict access to Activision games made for the much smaller cloud gaming market.

What accounts for this change? While the new decision adopts the very same argument CMA previously rejected; it now aligns them with the FTC and Chair Khan. In an interesting turn, Khan met with CMA officials a week before the UK regulators blocked the Microsoft Activision merger. The FTC has denied that Khan influenced the Microsoft-Activision case with her UK counterparts. 

However, CMA’s 400-page report explaining why they oppose the Microsoft-Activision merger makes reference to consulting with outside antitrust governmental authorities, including the U.S.

So even if Khan did not discuss the Microsoft-Activision merger at her recent meeting with CMA, someone from the FTC did. While this does not confirm Activision’s CEO Bobby Kotick’s charge that CMA has become a “tool” of the FTC, it appears to support it. There appears to be a level of private communication and cooperation between the FTC, CMA, and other European antitrust regulators. This level of secretive meeting should concern all businesses and consumers. It’s particularly concerning Khan may be working with foreign regulators in hopes to influence/win cases and stop mergers in ways that would not hold up in American courts.

House Judiciary Committee Chair Jim Jordan is already investigating Khan’s conduct as FTC Chair. He should add Khan’s possible work with foreign antitrust regulators to his agenda. Congress should demand a full accounting of all topics discussed in any and all meetings between American and foreign regulators. The American people have a right to know how decisions that affect their lives are being made, especially if those decisions are influenced by consultations and possible secret deals with foreign governments.