The FTC’s efforts to block XBox owner Microsoft’s proposed acquisition of Activision-Blizzard, one one the world’s largest video game companies, faces a major hurdle in the continued global dominance of Sony over the video game console market.
The FTC led by the aggressively pro-regulation Biden appointee Lina Khan, is one of the few major regulators attempting to block the acquisition, which has been approved in numerous other major jurisdictions including Japan and Brazil.
The Activision Blizzard Booth is shown on June 13, 2013, during the Electronic Entertainment Expo in Los Angeles. British antitrust regulators scrutinizing Microsoft’s blockbuster purchase of videogame maker Activision Blizzard narrowed their investigation on Friday, March 24, 2023 by dropping concerns the deal would hurt the console gaming market. (AP Photo/Jae C. Hong, File)
The FTC argues that Microsoft could undercut its competitors in the video games console market by making major Activision-Blizzard titles, chiefly Call of Duty, exclusive to Microsoft devices. Microsoft has countered by pledging to make Call of Duty available to other consoles, including Nintendo devices, which do not currently carry the franchise.
The biggest hurdle to the FTC’s argument is the continued strength of Sony, owner of the PlayStation range of games consoles, in relation to Microsoft. Unlike Nintendo, Sony carries the Call of Duty franchise on its devices and is the party that would suffer the most damage if Microsoft made it exclusive.
But Sony is in an extremely strong position in the video game console market compared to Microsoft. Of the five best-selling video games consoles of all time, two (including the number-one selling console of all time, the PlayStation 2) are Sony’s. The other three are Nintendo products.
Microsoft has made this argument a centerpiece of its case against the FTC. At a recent press conference, the company pointed to the PlayStation’s towering market share compared to XBox. In Europe, the PlayStation’s market share is four times that of the XBox. Globally, it is more than double.
Both Democrat and Republican members of Congress have expressed concern about Sony engaging in the same exclusivity deals that the FTC says Microsoft is prone to.
In a series of March 23 letters to United States Trade Representative Katherine Tai and U.S. Department of Commerce Secretary Gina Raimondo, they accused Sony of utilizing exclusionary tactics to maintain its marketplace dominance.
From one of the letters:
We understand that Sony – which holds 98 percent of the market – pays third-party game publishers not to make their content available on Xbox and systematically negotiates exclusivity arrangements that keep the most popular games in Japan off Xbox.
On March 28, the Japan Fair Trade Commission approved the Microsoft Activision deal without conditions, joining Serbia, Chile, Brazil, and Saudi Arabia.
Nonetheless, the FTC continues to block it under the belief that Microsoft will withhold Call of Duty and other popular games from the PlayStation.
Via the FTC:
Agency alleges that maker of Xbox would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content
Lina Khan, under fire for an overly-aggressive approach that has yielded little in the way of results, is looking for a big win. Biden’s FTC has recently come under fire for disregarding the rule of law and due process, with Commissioner Christine Wilson recently announcing her departure from the Commission in an opinion editorial for the Wall Street Journal.
“Since Ms. Khan’s confirmation in 2021, my staff and I have spent countless hours seeking to uncover her abuses of government power. That task has become increasingly difficult as she has consolidated power within the Office of the Chairman, breaking decades of bipartisan precedent and undermining the commission structure that Congress wrote into law,” Wilson wrote.
Allum Bokhari is the senior technology correspondent at Breitbart News. He is the author of #DELETED: Big Tech’s Battle to Erase the Trump Movement and Steal The Election.