FTC Chair Lina Khan testifies during a hearing of the House Energy and Commerce Subcommittee on Innovation, Data and Commerce titled “Oversight of the Securities and Exchange Commission” at the Rayburn Building on Tuesday, April 18, 2023.
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When a federal judge on Tuesday decides denied the Federal Trade Commission’s request for a preliminary injunction To prevent Microsoft from completing the acquisition Activating blizzardshe also rejected FTC Chairwoman Lina Khan’s vision of antitrust enforcement.
Although the judge’s decision does not mean the agreement is completely clear, as the FTC can appeal and the UK competition enforcement agency also has the right to appeal. oppose the dealit’s indicative of the existential challenge Khan’s enforcement strategy faces in court.
fight with The deal is 68.7 billion USD was one of the biggest changes to the FTC under Khan, who President Joe Biden appoints seat in 2021. Khan first rose to prominence in antitrust circles for her criticism of the way antitrust enforcement overlooked potential abuses of Amazon.
But even as many in Congress have become more open to a different view of antitrust in the digital age, the courts still pose a major barrier to newer theories about how Online companies can accumulate and use power to hold back rivals.
Judge Jacqueline Scott Corley wrote that the FTC had not shown it was capable of prevailing in its internal proceedings over the merger administrative case, based on the agency’s view that the settlement was valid. ability to significantly reduce competition. The FTC has argued that Microsoft could make some of its games exclusive on its own game consoles or degrade the experience of Activision games on rival services if the deal ends. . Instead, Microsoft has said that it will make these games more widely available.
Corley agrees with Microsoft’s position.
“In contrast, record evidence indicates that consumers have more access to Call of Duty and other Activision content,” she wrote.
She added that, “Despite having completed extensive exploration of the FTC’s administrative proceedings, including the production of nearly 1 million documents and 30 depositions, the FTC has yet to identify a single document. which conflicts with Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch).”
The ruling means the parties are closer to being able to complete the merger by the July 18 deadline. But the FTC can still appeal and the companies still face objections from the Agency. competition and the UK market for this agreement.
A spokesperson for the FTC said in a statement: “We are disappointed with this outcome due to the obvious threat this merger poses of opening up competition in cloud gaming, the subscription service. sign and dashboard”. “In the coming days, we will announce our next step to continue the fight to stay competitive and protect consumers.”
This is not the first time a judge has cast doubt on the FTC’s antitrust enforcement theories under Khan. A federal judge also rule against The FTC’s attempt to block Meta’s acquisition of virtual reality fitness app maker Inside Unlimited, the agency says, could reduce competition in a nascent market.
Khan has continued to bring lawsuits against tech companies that will face similar hurdles in court. The most notable may be the agency Expected challenge of Amazon’s antitrust practices.
Khan’s defenders were quick to criticize Corley’s decision. Matt Stoller, director of research at the American Economic Freedom Project, wrote on Twitter that Corley had “changed the law” in writing that “the FTC must show that the merger would substantially reduce competition.” Stoller noted that relevant merger law states that the government must show “the impact of such an acquisition that could substantially reduce competition, or tend to create a monopoly.”
“[W]When a Biden judge – whose son worked at Microsoft – got through the biggest tech merger of all time, we had serious problems with the judiciary,” Stoller wrote. disclosure her son’s work, not in the gaming department, at a hearing in June.
Despite the criticism, the ruling is yet another example of a judge distrusting Khan’s theory about how a tech company can leverage acquisitions in neighboring markets to harm. for competition. That is the case even if the judge is appointed by the same president who appointed Khan to the FTC.
With the new digital competition law stalled in ParliamentOvercoming judges’ skepticism towards newer theories about the application of existing laws will likely remain the biggest challenge for law enforcers.
SEE: Judge denies FTC request for preliminary order to block Microsoft-Activision deal
