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The Federal Trade Commission's Request for Preliminary Injunction Denied in Microsoft-Activision Deal
FTC Chair Lina Khan's Vision of Antitrust Enforcement Faces Challenges in the Courts
A federal judge rejected the Federal Trade Commission's request for a preliminary injunction to prevent Microsoft from completing its acquisition of Activision Blizzard. This ruling not only puts the deal one step closer to completion but also challenges FTC Chair Lina Khan's vision of antitrust enforcement. While the FTC can still appeal the decision, it highlights the difficulty that Khan's enforcement strategy faces in the courts.
FTC's Swinging at the $68.7 Billion Microsoft-Activision Deal
Fighting against the $68.7 billion deal has been one of the FTC's biggest endeavors under Khan's leadership. Khan, who was appointed by President Joe Biden, first gained recognition for her critique of antitrust enforcement that overlooked potential abuses by Amazon. However, despite the growing openness towards a different view of antitrust in the digital age, the courts remain a major obstacle for newer theories about how online companies can leverage power to stifle rivals.
Judge's Ruling in Favor of Microsoft's Commitment to Consumer Access
The judge's ruling emphasized that the FTC failed to demonstrate a likelihood of success in its administrative challenge of the merger. The FTC argued that Microsoft could potentially make games exclusive to its own consoles or diminish the experience of Activision games on rival services. However, Microsoft countered by stating its commitment to making the games more widely available. The judge agreed with Microsoft, stating that the evidence pointed to increased consumer access to Call of Duty and other Activision content.
Next Steps and Future Challenges for the Deal
Although the ruling brings the parties closer to completing their merger by the July 18 deadline, the FTC can still appeal, and the deal still faces opposition from the UK Competition and Markets Authority. Despite being disappointed with the outcome, the FTC has vowed to continue fighting to preserve competition and protect consumers. This ruling adds to a growing list of judicial skepticism towards Khan's theories of tech companies leveraging acquisitions to harm competition. As new digital competition laws remain stalled in Congress, overcoming this skepticism will likely be a significant challenge for enforcers.
Hot Take: Potential Impact on New Business
The denial of the Federal Trade Commission's request for a preliminary injunction in the Microsoft-Activision deal has significant implications for new businesses entering the digital market. With the court ruling in favor of Microsoft's commitment to consumer access, it sends a signal that companies with substantial resources and a focus on broadening consumer reach may face fewer regulatory obstacles. This could potentially impact the competitive landscape and pose challenges for new businesses trying to enter and thrive in the industry.
The judge's emphasis on increased consumer access to Activision content suggests that companies willing to prioritize consumer benefits and expand availability may receive more favorable treatment from the courts. This puts pressure on new businesses to align with consumer interests in order to avoid regulatory scrutiny and potential legal challenges.
Furthermore, the ruling highlights the difficulty of enforcing antitrust regulations in the digital age. As the FTC's pursuit of the Microsoft-Activision deal demonstrates, even with a strong antitrust stance under Chair Lina Khan, the courts remain skeptical of newer theories about how tech companies can leverage power to harm competition.
For new businesses, navigating the antitrust landscape becomes increasingly complex as they must not only compete with established players but also understand and adapt to evolving regulatory dynamics. The ruling serves as a reminder for new businesses to carefully consider their strategies and ensure that they prioritize consumer access and welfare to avoid potential antitrust issues in the future.
Article First Published at: https://www.cnbc.com/2023/07/11/microsoft-activision-ruling-highlights-khans-struggles-to-fight-tech.html.svg)
