Abstract
In 2018, the United States Department of Justice filed an antitrust lawsuit against the $80–100 billion merger between AT&T (a major cable provider) and Time Warner (a major content provider). The government predicted that the merged company would foreclose content to competitors, raise content prices, and slow innovation. The government lost the case because the court did not accept its theory that the merged company would enjoy increased bargaining leverage that would disadvantage competitors by offering the merged company’s content at increased consumer prices. In 2022, the Federal Trade Commission (FTC) offered a similar rationale in seeking to block the Microsoft/Activision Blizzard’s $68.7 billion merger. This paper compares and contrasts the two mergers, as well as three vertical merger cases that occurred around the same time of the closing of Microsoft/Activision, with the intent of highlighting the issues with assessing vertical mergers, with particular focus on online industries.
I. Introduction
Microsoft and Activision closed a $69 billion merger on October 13, 2023, after clearing regulatory hurdles in the United States, the United Kingdom, and Europe. 1 The first roadblock occurred on December 8, 2022, when the Federal Trade Commission (FTC) filed suit against Microsoft’s plan to acquire Activision/Blizzard. 2 The list of potential reasons for the suit is familiar: the merger may (1) harm consumer choice and raise prices for games, (2) weaken competition by foreclosing crucial games to competitors, (3) stifle innovation, and (4) hinder the growth of emerging markets.
Microsoft’s responses are also familiar. The merger would benefit consumers by stimulating competition through Microsoft entering new markets, notably the mobile gaming market, with the combined company offering a wider array of new games and new service contracts.
The FTC’s suit is reminiscent of the U.S. Department of Justice’s ((DOJ) unsuccessful antitrust case against the merger of AT&T and Time Warner. 3 In both cases, the merging upstream content provider and downstream distributor 4 claimed the transaction would benefit society, while the government claimed that the merging parties would have the incentive and ability to disadvantage downstream competitors that distribute content.
The concern that vertical mergers can harm competition through anticompetitive terms and conditions for access to upstream inputs (e.g., content) and disadvantage consumers is reflected in recent revisions to the antitrust agencies’ Merger Guidelines. 5 In 2020, the DOJ/FTC issued new Vertical Merger Guidelines, which the FTC withdrew in 2021. 6 The most recent revision—the 2023 Merger Guidelines, addresses the evaluation of the competitive effects of vertical mergers in its Guideline 5: whether or not a proposed merger would violate the law when it creates a firm that would limit access to products or services needed by its rivals, 7 for example, would the merged AT&T/Time Warner limit access to Time Warner content and/or would the merged Microsoft/Activision limit access to certain prominent Activision games to competing downstream distributors.
Another competitive issue that appeared in the AT&T/Time Warner merger and the Microsoft/Activision case was whether commitments designed to mitigate the ability and incentive to provide content to competitors under unfavorable terms should be considered in evaluating the proposed merger. In AT&T/Time Warner, the merging parties had made a commitment to provide binding arbitration in the case of disputes over access to Time Warner content. Similarly, in Microsoft/Activision, the parties agreed to make certain popular games, e.g., Call of Duty available to competing distributors for an extended time period. 8
The issue of how such merger commitments should be evaluated was also a central issue in two proposed mergers in the health care industry. First, the DOJ unsuccessfully challenged UnitedHealth Group’s (an insurance company) acquisition of Change Healthcare (a company providing claims editing and electronic data interchange between health care providers and insurance companies). 9 The merger commitment was the divestiture of Change’s claim’s editing operation. Based on this commitment, which was mandated by the court’s opinion, the court concluded that the acquisition would not substantially lessen competition for claims editing. 10 Second, the Fifth Circuit’s remanded the FTC order that Illumina—a monopoly provider of next-generation DNA sequencing medical applications unwind its reacquisition of Grail—currently a monopoly supplier of multi-cancer early detection tests. 11 While the court concluded that the FTC had met its burden that the acquisition would substantially lessen competition for the research and development of multi-cancer early detection tests, it directed the FTC to evaluate the commitment that Illumina provide its platforms to Grail’s competitors at the same price and terms as provided to Grail. 12
Early odds were that the FTC would lose its case against the Microsoft/Activision merger. Critics of the suit claimed that Activision was not a big player in the content part of the gaming market. Then, a surprising development happened. The United Kingdom’s Competition and Marketing Authority (CMA) initially blocked the merger because it would threaten the nascent but rapidly growing cloud gaming market, 13 which, in 2021, represented about $1.25 billion of an estimated $180.3 billion worldwide gaming revenue. 14 In contrast, The European Commission (EC) approved the merger, with Microsoft offering comprehensive licensing commitments to assure open access to content. 15
In essence, both the CMA and EC were concerned about foreclosure but from different perspectives. As a result, the proposed remedies differed. The CMA believed that Microsoft would have the incentive to use Activision’s content to foreclose current and future cloud gaming platforms. The remedy was structural. Microsoft agreed to acquire Activision’s non-European Economic Area (EEA) excluding cloud streaming rights outside of the EEA (Ubisoff Divestment Agreement) for all current and future Activision PC and console games during the next 15 years. 16
The EC also had concerns about the merger but focused on the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and the supply of PC operating systems. The EC recognized the streaming video games was a small distribution channel, but it had the potential to expand rapidly. If that occurred, Microsoft might be able to foreclose downstream game distributors and make Activision games exclusive to its own cloud game streaming service. The EC accepted Microsoft’s proposed behavioral remedies. It would offer free licenses to consumers in the European EEA that would allow them to use any cloud game streaming service. Microsoft would also offer free licenses to streaming service providers for the same period within the EEA. 17
On June 12, 2023, the FTC sued Microsoft to stop the merger from closing before its initial July 18, 2023, termination date. The suit was filed in the Northern District of California. 18 On July 10, 2023, The Court denied the motion for preliminary injunction after a five-day evidentiary hearing, ruling that the FTC had not shown it would be likely to succeed in its case. 19 The FTC has appealed the District Court’s decision 20 and the FTC scheduled an administrative proceeding to begin 21 days after the Ninth Circuit renders an opinion. 21
Following the FTC’s so-far unsuccessful attempt to block the merger, the CMA approved the deal on the same day it closed, based on the parties’ agreeing not to include Activision’s cloud gaming rights in the deal. 22 After the deal closed, the FTC indicated that it would pursue its appeal. 23 While the stay denial strongly indicates that the FTC’s suit would fail in the United States, it is not a forgone conclusion. If successful, the merging parties could face the unpleasant task of unwinding the merger.
From an antitrust perspective, the CMA’s initial decision lent support to the FTC’s case, suggesting the government overseers of the online economy believe they have the capability to identify emerging markets that could be monopolized before they develop. This is quite an assumption that needs to be analyzed very carefully, which we will try to do.
The rest of the paper is organized as follows. The second section describes the structure of and trends in the gaming industry, which provide context for the issues raised by the Microsoft/Activision merger. The third section summarizes the FTC’s complaint, Microsoft’s response, and the trial court’s decision not to block the merger. The fourth section compares the outcome of the Microsoft/Activision merger in the United States to (1) the AT&T/Time Warner case, (2) the CMA’s initial denial and subsequent approval of the Microsoft/Activision merger in the United Kingdom, and (3) the EC approval of that transaction. Section 5 is a brief reflection on the CMA and EU decisions. The final section concludes the paper.
II. Gaming Market Structure and Trends
Statista offers a comprehensive set of statistics on the U.S. gaming market. U.S. mobile game revenue is estimated to account for $19.3 billion of $113.4 billion video game revenue in 2024. 24 Mobile gaming is the largest source of gaming content, accounting for about half the revenue from game purchases. 25 The mobile gaming market is expected to grow at a compound annual growth rate of 6.3 percent between 2024 and 2029. 26 Cloud gaming is only $1.94 billion in 2024, or about 1.7 percent of the domestic market, measured in dollars, but is expected to grow more rapidly than the overall market (29.0% vs. 8.1%). 27
Newzoo offers a global perspective on the gaming market. The PC and console market segment grew at a compound annual growth rate of 5.8 percent between 2015 and 2022. 28 However, in 2022, playtime decreased by 23 percent and there was a decrease in spending. Newzoo. attributes the decline to the end of the COVID shutdown. 29 A comparison of popular games by selected countries shows similar top games in the U.S. and German markets. There is much less overlap with Japan. 30 Newzoo also expects fewer big releases of new games. Instead, the AAA publishers will follow the movie industry by developing sequels, remakes, and remasters. 31 Cross-platform play is becoming more common, with 25 percent of gamers using both a PC and a mobile device, and 18 percent of gamers using both a console and a mobile device. 32
The Congressional Research Service (CRS) issued a report to assess the potential effects of the proposed Microsoft/Activision Blizzard merger. They summarized market data from a variety of source, which showed that: In 2021, Microsoft had the second-highest share in the U.S. market for game consoles at 34.8%, according to a report from MarketLine, an industry research firm; estimates for Sony and Nintendo were 40.7% and 24.5%, respectively. In January 2022, Microsoft stated that it had more than 25 million Game Pass subscribers. In April 2022, Microsoft reported that more than 10 million people have streamed games over Xbox cloud gaming, although it is unclear how long or how many times users accessed the service. Estimates from Ampere Analysis reportedly indicate that Game Pass makes up about 60% of the video game subscription market.
33
While currently accounting for only a small fraction of domestic gaming revenues, cloud gaming is expected to grow substantially and as a result will likely depress demand for consoles because users can access games from any location with an internet connection. 34 The cloud computing market appears to be competitive. Amazon, the pioneer in Cloud Computing, has a 34 percent share of this market. By contrast, Microsoft’s Azure is in second place with a 21 percent market share, and Google’s share is 11 percent. 35
Another basic issue is whether cloud-based game subscriptions target mainly the non-mobile market because Microsoft claims its purchase of Activision is to enter the mobile market. Gitnux reports that consoles account for approximately 50 percent of the total market. in the United States. However, the smartphone segment accounts for more than 10 percent of market revenue and is projected to be the fastest-growing market segment over the next few years. 36
III. The FTC’s Complaint, Microsoft’s Response, and Trial Court Decision
A. FTC’s Complaint
The FTC’s case focuses on the market for high-performance video game consoles. The FTC claims that only a few developers are capable of producing games for this market and that Microsoft and Sony dominate the high-performance console market, making them gatekeepers with market power.
The $68.7 Billion size of the merger with Activision would reinforce Microsoft’s market power, which could extend beyond the traditional concern about the potential effects of market foreclosure such as raising prices or lowering quality of products sold to competitors and lowering market innovation. 37
The FTC noted that this merger has features of both a horizontal and vertical merger. “Microsoft is vertically integrated: through its in-house game studios, it develops and publishes popular video game titles such as Halo.” 38 “Activision develops and publishes high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. Activision’s games include high-quality games that are commonly referred to in the industry as “AAA” titles. AAA games are costly to produce because of the creative talent, budgets, and time required for development.” 39
Despite Microsoft’s claims that it will not foreclose games to competitors, the FTC noted that Microsoft has a track record of making content exclusive to Microsoft’s platform from acquired game-developer companies. The FTC pointed to Microsoft’s 2021 acquisition of ZeniMax. Microsoft assured the EC that Microsoft would not have the incentive to withhold titles from competitors. Yet, Microsoft made several newly acquired ZeniMax titles Microsoft exclusives. 40
The FTC was also concerned that Microsoft will dominate the emerging cloud subscription services market. 41 Cloud gaming services have been around since the late 2000s. They recently became more attractive because internet speeds and video compression have increased substantially, which allows subscribers to play sophisticated games online. The cloud reduces the need for expensive game hardware owned by the subscriber. The cloud also allows the subscriber to access games from a variety of platforms, including mobile devices. While the cloud still does not provide the gaming experience for AAA games that a console does, it is catching up. Moreover, it opens huge libraries to subscription customers. Xbox is a leader in this emerging market. 42
The FTC claimed that “AAA gaming content is a substantially important input for High-Performance Consoles, Multi-Game Content Library Subscription Services and Cloud Gaming Subscription Services because these products use AAA content to attract and retain users. AAA content is difficult to produce given the intense resources and specialized competency required to develop these valuable games.” 43
The FTC defined the relevant geographic market as the United States because consumer preferences differ across countries. 44 Therefore, the FTC’s complaint is confined to the United States. 45
B. Microsoft’s Response
Microsoft rejected the FTC’s claims that the merger will harm consumers by allowing the merged company to dominate the high-end of the gaming market. 46 Microsoft responded that it is buying Activision to compete in a highly competitive global market. Xbox is the third largest console producer worldwide. Activision is one of hundreds of publishers of games. The main attraction of the merger is to allow Microsoft to be more competitive in the rapidly growing worldwide mobile market. 47
Microsoft offered data to support its case, which is summarized in Table 1. 48
Microsoft’s Global Market Shares for Consoles, Titles, Mobile Games, and Revenues.
While Xbox publishes games for consoles and PCs, it has far fewer popular exclusive games than Sony and Nintendo. And Xbox has almost no presence in mobile gaming, which is the largest and fastest growing segment of gaming. 50
Microsoft contended that maintaining broad availability of games is good for gamers, as well as for Microsoft. Microsoft stated that it makes no sense to withhold Call of Duty from competing platforms after the merger. Microsoft is paying almost $70 billion for Activision based on the revenue streams produced by these types of games. Of course, Microsoft, like any other game distributor, wants exclusive titles to distinguish itself from its competitors. But in the case of Call of Duty it extended its contract with Sony’s PlayStation for an unprecedented 10 years. 51 Microsoft does not claim that all future Activision games will not be exclusive to Microsoft. That is the strategy Microsoft used with ZeniMax games. Microsoft continues to share current ZeniMax titles with PlayStation but anticipates that some future titles that will be Microsoft’s exclusively. 52
Microsoft also questioned the FTC’s claim that subscription services and cloud gaming services are separate markets. According to Microsoft, cloud gaming services are a cost-effective way to offer subscription services to customers with high-speed internet connections. 53
C. Trial Court’s Decision
The Northern District of California’s Court’s denial of the FTC’s motion for a preliminary injunction to block the Microsoft merger before the case is adjudicated was a significant setback for the FTC. The Court’s explanations were reminiscent of the ruling in the AT&T case, where the judge rejected the premise that the merger would foreclose markets. The Court agreed that Microsoft has the ability to foreclose content to competitors’ but concluded that the FTC has shown that Microsoft has the incentive to do so. 54 Similar to the EC’s earlier determination and CMA’s eventual acceptance of Microsoft’s commitments, the Court cited as proof Microsoft’s open commitment to make available Call of Duty on existing platforms and expand its availability. 55 Deal plan documents show that a major justification for the merger was revenue from Sony PlayStation platforms. 56 The Court accepted the premise that foreclosure would damage Microsoft’s reputation in the gaming industry and could not find any instance of a multiplayer, multi-platform game being withdrawn from the market. 57 Given this evidence, the Court rejected the FTC’s model that attempted to demonstrate that revenue gains from making Call of Duty exclusive to Xbox would be profitable for Microsoft. The Court concluded that the model’s premises were unsubstantiated. Again, referring to Microsoft internal documents, the Court concluded that mobile content was a critical factor in the deal. The FTC case relies on PlayStation sales, which addresses competition for non-mobile gaming. 58
The Court also addressed the FTC’s claim that Microsoft will foreclose new games, and this foreclosure would stifle innovation in the gaming industry. The Court agreed that Microsoft’s acquisition of ZeniMax did lead to new games becoming exclusive to Xbox. However, the FTC’s case centers on Call of Duty. 59 The Court concluded that the FTC had not proven that future versions will become exclusive to Xbox. As for innovation, the Court said that the FTC did not consider developers who would now have the incentive to collaborate with Xbox of Activision studios. 60
IV. AT&T/Time Warner, CMA and EC Comparisons
The AT&T/Time Warner merger case has many similarities to Microsoft/Activision. The AT&T/Time Warner merger was $80 billion. It involved a distributor of cable video (AT&T) and a video content provider (Time Warner). The DOJ claimed that the merger would foreclose content to other cable distributors. AT&T countered that the combined company would offer new, innovative services, which would tap the capabilities of both companies.
The market definition was multichannel video distribution (live programming) to approximately 1,200 local areas. In addition to AT&T, distributors included other traditional telephone companies, e.g., Verizon, cable television providers, as well as companies such as Hulu Live that distribute live content over the internet. While the product market did not include new streaming services such as Netflix, the court’s analysis recognized that these options would limit the ability of the merged company to disadvantage rival distributors.
The trial judge’s opinion rejected the DOJ’s request to block the merger, based to a large extent on the conclusion that the government was unable to demonstrate that its increased bargaining leverage theory of harm would substantially lessen competition. 61 For example, the opinion observed that the government’s expert had not accounted for the effects of Turner’s existing contracts to supply content and that the use of alternative inputs into the bargaining model actually produced a price decrease for consumers. 62
The AT&T/Time Warner outcome led some analysts to predict that the FTC will ultimately be unsuccessful in its opposition to the Microsoft/Activision merger. For example, Adam Adler believed that the FTC overstated Activision’s importance in a highly competitive industry for content. The FTC focused on the “Big 4,” AAA, content publishers, which includes Activision. Adler contended that there are countless other AAA publishers, including Square Enix, Bandai Namco, and Tencent to name a few, and the gaming market extends way beyond AAA publishers. He also contended that this is primarily a vertical merger, which, like the AT&T/Time Warner merger, is difficult to challenge. 63 Christopher Zara pointed out that the FTC lost a similar vertical merger case against the merger of Illumina and Grail in the health care industry. 64
While the CMA found that the merger would not significantly lessen competition for console gaming services, it initially ruled to block the merger because it would significantly lessen competition for cloud gaming services because (1) Microsoft has a 60–70 percent market share and (2) its original behavioral remedy to share content was insufficient. The CMA attributed this high market share to Microsoft’s leading PC operating system and global cloud infrastructure (Azure and Cloud Gaming). These are important advantages of running a cloud gaming service. It is in this market segment that Microsoft would have the incentive to make Activision’s games exclusive to Microsoft. The CMA noted that Microsoft’s sharing remedy did not extend to subscription services that did not use Microsoft’s operating system and that after the merger, Microsoft’s incentives to make games compatible with rival operating systems would be significantly lower. This outcome would disadvantage and potentially distort the choice of operating systems for new entrants. 65 As noted in the introduction, the merging parties addressed this concern by excluding Activision’s cloud gaming rights.
The EC also had concerns that the merger would harm competition in the cloud gaming sector by giving Microsoft control over Activision’s popular game franchises, which could lead to the merged company eventually dominating the market. The EC approved the merger subject to two important commitments (proposed by Microsoft) that ensure that the emerging cloud-based subscription service will not be harmed by the merger. Consumers can stream all current and future Activision/Blizzard PC and console services from Microsoft or competitors if they have a license for them. 66
V. Reflections on the CMA and EC Decisions and a Look Ahead
CMA views the consoles and subscription games accessed through the Cloud as distinct markets. While Microsoft has a large market share of cloud-based subscriptions, the Cloud itself is highly competitive. 67 The console market is a mature market as shown above. Using Activision’s expertise as an entryway into the mobile market is one of Microsoft’s major justifications for entering the market. Yet, the CMA does not address the effects of 5G on the mobile gaming market. The discussion does not address the technological side of the gaming industry in any depth.
The focus is on gaming market segments based mainly on existing hardware, software, and content. The CMA suggested that cloud-based gaming is an emerging market that will likely stimulate innovation. In the CMA’s view, the merger will impede new products and commercial arrangement. Predicting the pathways to innovation is a tricky business under the best of circumstances. In this case, developments in Artificial Intelligence and Virtual Reality, which are the bases for the merging metaverse, 68 will likely have a significant impact on these pathways. If these disruptive technologies do not materialize in the near-term, an interesting question is whether a strategy of selective exclusivity of games will actually increase the variety of games as Microsoft’s competitors respond by introducing their own.
While the CMA’s initial decision may have bolstered the FTC’s case against the merger, CMA’s and the EC’s acceptance of Microsoft’s commitments likely cut the opposite way. The FTC will also face the challenge of proving that its selection of relevant markets is correct. At a minimum, the data cited above suggests that the European and American markets are similar. The FTC will also face the challenge to its description of Activation as an AAA publisher with important competitive significance. The CMA dismissed this contention.
VI. Conclusion
The FTC has recently become much more activist in challenging large mergers that have the characteristics of a vertical merger. They have generally not been successful in preventing them, due in part to the difficulty of defining specific markets and abuse of market power within these markets in the online economy. As Glass and Tardiff explained, 69 better understanding of emerging technology would facilitate the identification of pockets of market power.
Footnotes
Acknowledgements
The authors thank Editor-in-Chief Salil Mehra and two anonymous reviewers for helpful suggestions on the organization of and analysis in this article.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
1.
2.
3.
In 2018, The U.S. District Court for the District of Columbia denied DOJ’s request to enjoin the merger (United States v. AT&T Inc., 310 F. Supp. 3d 161, 254, https://www.dcd.uscourts.gov/sites/dcd/files/17-2511opinion.pdf), which was upheld by the D.C. Circuit Court in 2019 (United States v. AT&T Inc.,916 F.3d 1029 (2019), 
.
4.
While both AT&T/Time Warner and Microsoft/Activision involve the merger of an upstream content provider with a downstream distributor, the latter merger is somewhat more complicated. First, when games are distributed with consoles, the merger also adds Activision content to Microsoft’s existing games (in contrast, pre-merger AT&T did not provide content). Second, in the online world, Microsoft is in only the content business. Another interesting sidelight is that Microsoft needs help to enter the mobile market. Like Facebook before it. Microsoft has a history of failure trying to enter this fast-growing market. In Facebook’s case, the acquisitions of WhatsApp and Instagram were a financial success. Whether they benefited the public is still controversial.
5.
Until the AT&T/Time Warner case, vertical merger litigation had been rare. This was the first case DOJ litigated to conclusion in forty years. Dennis W. Carlton et al., Evaluating a Theory of Harm in a Vertical Merger: AT&T/Time Warner, IN
6.
U.S. Department of Justice and Federal Trade Commission, Vertical Merger Guidelines, June 30, 2020, https://www.justice.gov/atr/page/file/1290686/download. In 2021 the FTC withdrew its endorsement of the 2020 Guidelines. Federal Trade Commission Withdraws Vertical Merger Guidelines and Commentary, Press Release, Sept. 15, 2001, https://www.ftc.gov/news-events/news/press-releases/2021/09/federal-trade-commission-withdraws-vertical-merger-guidelines-commentary. Subsequent to the closing of the Microsoft/Activision merger, the Agencies adopted Merger Guidelines that supersede both the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines. U.S. Department of Justice and Federal Trade Commission, Merger Guidelines, Dec. 18, 2023, .
7.
Id. at 13–18.
8.
The merged Microsoft/Activision may designate important new content as exclusive to its customers to distinguish Microsoft from its competitors. The duration of the commitment to current content has potential competitive implications: if the heretofore committed content is available at less favorable terms, the issue becomes whether the gaming industry after the merger will be sufficiently competitive that the merger does not lead to anticompetitive practices that lead to monopolization.
9.
10.
The court concluded that the government had not established that UnitedHealth Group would be likely to substantially lessen competition by favoring its insurance operation over competing insurers using its EDI.
11.
12.
13.
At the time of the FTC and CMA adverse actions, some commentators raised concerns that other nation’ regulatory decisions could weaken America’s strong position in the online economy. See, for example, Jay Clayton & Gary D. Cohn, The Microsoft-Activision Mess is a Blow to American Sovereignty, .
14.
Cloud gaming estimate is from Spherical Insights, https://www.sphericalinsights.com/reports/cloud-gaming-market. Total market size is from Tim Wijman, The Games Market and Beyond in 2021: The Year in Numbers, .
15.
16.
17.
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21.
22.
23.
24.
Statista, Video-Game Market Revenue in the United States, 2023, p. 6.
25.
Id. In addition to mobile games, Statista reports revenues for online games, cloud gaming, download games, physically-sold games, live-stream gaming, and gaming networks.
26.
Id.
27.
Id.
28.
Newzoo, PC & Console Gaming Report, 2023, p. 11, https://resources.newzoo.com/hubfs/Reports/PC%20and%20Console%20Report/2023_Newzoo_PC%20%26%20Console%20Gaming%20Report.pdf?utm_campaign=2023-03-all-PC%26Console%20report&utm_medium=email&_hsenc=p2ANqtz-8YmAArl6fd89nBY9OzyHZHJQ5RWG5TVHN2iQjJnsxyQXvK8xhNa1kJjm6oSEscGPiVOzitulpBdswpL8BBzTz4nOTGeUS27p2hVViofAzSCsMtfYc&_hsmi=249310249&utm_content=249310249&utm_source=hs_automation.
29.
Id. at 5.
30.
Id. at 23.
31.
Id. at 13.
32.
Id. at 44.
33.
35.
Victor Glass & Timothy Tardiff, Analyzing Competition in the Online Economy, 68(2)
37.
FTC Complaint, supra note 2. Senator Elizabeth Warren and three other Senators were also concerned that Microsoft was capitalizing on a depressed stock price for Activision because it is under investigation for sexual misconduct and discrimination. Letter dated March 31, 2022, to The Honorable Lina Khan from Senators Elizabeth Warren et al., United States Senate, .
38.
FTC Complaint, supra note 2, at par. 2.
39.
Id at par. 3.
40.
Id. at par. 12.
41.
United States District Court Northern District of California, San Francisco Division. Federal Trade Commission v. Microsoft Corp. and Activision Blizzard Inc. Complaint for a Temporary Restraining Order and Preliminary Injunction Pursuant to Section 13(b) of the Federal Trade Commission Act. Filed 06/12/2023, par.104, .
43.
FTC Complaint, supra note 2, par. 97.
44.
Id. at par. 93.
45.
A dispute over the extent of geographic markets also was present in the DOJ’s failure to enjoin the acquisition of Imperial Sugar—a financially distressed firm—by United States Sugar. United States v. United States Sugar, et al., C.A. No. 21-1644 (MN), September 28, 2022, https://casetext.com/case/united-states-v-united-states-sugar-corp-1, which was upheld by the Third Circuit, United State v. United States Sugar, 73 F.4th 197 (2023), . The DOJ proposed a limited regional market, while the merging parties and the court stated that the geographic scope was larger, for example, national, because of the minor effect of transportation costs. In addition, the court concluded that DOJ’s product market of vertically integrated firms that produce and sell refined sugar to wholesale customers excluded downstream firms that obtain refined sugar from sugar producers and then sell to wholesale customers in competition with the integrated producer/seller firms.
46.
The CRS report reviewed in the previous section observed the while there were some potential concerns about the anticompetitive threats posed by the merger, it did not find any compelling evidence that this is a major risk. Moreover, the CRS did not find compelling evidence that the merger would affect the labor market for game developers.
47.
48.
Id. at 4.
50.
Microsoft Answer, supra note 47, at 3.
51.
Id. at 5.
52.
Id. at 6.
53.
Id. at 7.
54.
Preliminary Injunction Opinion, supra note 19, at 33.
55.
Id. at 33.
56.
Id. at 34. The FTC had cited Sony’s objection to the merger as indicative that the merger would lessen competition.
57.
Id. at 37.
58.
Id. at 34.
59.
Id. at 44. The Court also noted that Microsoft continued to make the very popular Minecraft game available to competing platforms after it acquired it from Mojang in 2014. Id. at 37.
60.
Id. at 45.
61.
62.
Carlton et al. supra note 5, at 97.
63.
64.
65.
CMA, Anticipated acquisition by Microsoft Corporation of Activision Blizzard Inc., Summary, 2023, par. 77 https://assets.publishing.service.gov.uk/media/6448f377814c66000c8d067f/Microsoft-Activision_FR_Summary.pdf. CMA’s full report is available at .
66.
67.
Glass & Tardiff, supra note 35, at 181.
68.
69.
Glass & Tardiff, supra note 31, at 189–190.