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Washington Examiner
Restoring America
26 Feb 2023


NextImg:The FTC should settle the Microsoft-Activision dispute

Millions of parents and grandparents have purchased video games and consoles for their children and grandchildren. Of course, video games aren’t just for young people. An increasing number of seniors — the demographic represented by our organization, the 60 Plus Association — are playing video games as well, often on their phones.

Video games provide numerous benefits to older people, including opportunities to connect online with others and exercise both body and mind. Seniors can even bond with grandchildren around video games.

The fact that people of all ages enjoy video games on various devices underscores the strength of the video game sector. There are game titles for everyone, reflecting robust competition and consumer choice in the marketplace. The video game industry also creates jobs, drives innovation, and provides opportunities for investors.

But now, the Federal Trade Commission is threatening to undercut America’s success in this sector by suing to block Microsoft’s acquisition of video game developer and publisher Activision Blizzard. This is just one more recent example of federal regulators disrupting the efficiency of the marketplace.

Regulation should protect consumers, not competitors. Just as important, regulation should not undermine investment, innovation, or the ability of American companies to compete globally.

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Microsoft is best known for its Windows operating system and Office business productivity software, but it trails larger competitors in the video game sector, such as Japan’s Sony and China’s Tencent. Microsoft’s acquisition of Activision, best known for the video games Call of Duty and Candy Crush, will bolster its market position but still leave it trailing these two foreign competitors.

Nevertheless, according to numerous news stories, Sony has been working the halls of government in the United States and Europe, encouraging regulators to block Microsoft’s acquisition of Activision. At the same time, Japan’s own competition regulator has sat on the sidelines while Sony maintains a dominant advantage over Microsoft in Japan’s market for current-generation consoles.

Because Microsoft will not achieve dominant market share through its acquisition of Activision, the FTC has no legal cause to oppose the deal under U.S. antitrust laws. These laws are meant to prevent monopolization and egregious behavior such as price-fixing, not to serve as tools for managing competition or shaping industries.

In its filing against Microsoft, the FTC advances a flimsy argument forecasting that Microsoft might unfairly leverage the strength of its data centers, combined with Activision video games, to provide a market-leading video game streaming service. But why cast this possible future as an undesirable outcome? Several companies have launched video game streaming services — think of these services as Netflix or Hulu for video games — and Microsoft’s streaming service will provide innovation, competition, and consumer choice.

Currently, the majority of people lack access to the most cutting-edge video games because these games require an investment of hundreds of dollars to purchase a latest-generation video game console — or even more for a gaming PC. It also costs hundreds of dollars to buy a handful of top games.

Video game streaming services help overcome this barrier by providing a subscription model of payment and by enabling games to be played on a wider range of devices, including smartphones . Microsoft is seeking to acquire Activision to offer more titles through its streaming service and add customers. The company has also agreed to make Activision games available on competing platforms.

In other words, we are seeing an evolution in video games similar to what happened with movies. DVDs still exist, but consumers have increasingly turned to the convenience and affordability of streaming services. It makes no sense for the FTC to hamstring this market-driven evolution of the video game sector by seeking to block the Microsoft-Activision deal.

Improved streaming services, such as Microsoft envisions, would put the benefits of video games into the hands of more people, including seniors. The federal government fails consumers when its regulatory actions block choice and marketplace progress.

Last year’s midterm elections show that the public does not want an activist federal government that overreaches on regulation and economic interference. Under new House leadership, Congress should examine the FTC’s behavior with fresh eyes, ask hard questions, and take action to ensure the FTC does not again overstep its bounds. Congress should also urge the FTC to settle its lawsuit against Microsoft.

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Saul Anuzis is president of 60 Plus Association, the American Association of Senior Citizens, a nonprofit advocacy group based in the Washington, D.C., area.