So, the FTC views it as their role to protect Sony due to their failure to create a compelling cloud gaming service? That doesn’t seem very pro-consumer.
Yes. Obviously the laws and processes differ between jurisdictions but at least in the West regulators generally have much more power (and will, and political cover) to intervene in mergers than in operational matters. Mergers automatically trigger an antitrust process (though of course not everything gets referred to investigation). Business decisions don’t, so there’s generally a much higher hurdle for intervention.
That’s true up until the point where a player becomes utterly dominant in a market (i.e. has out competed everyone), at which point the government can step in with antitrust.
Basically, the government role in antitrust is to a) prevent consolidation which harms competition and b) intervene in the market when it gets too consolidated (i.e. competition drops below an acceptable threshold).
The government is intervening in scenario a) here, claiming the consolidation would harm competition. I’m not entirely sold on that theory of the case, but it’s at least a reasonable argument to make. That said, there are plenty of “whatabouts” that one could throw around, and it seems a little bit unusual to have the also-ran competitor in the market (Microsoft, whose Xbox sales trail Playstation’s pretty badly in every generation except the 360, where the PS3 just edged out Microsoft) being targeted.
Given that the form of competition that every player in the market (including Sony) prefers and which generally characterizes the market – exclusives – is also fundamentally anticompetitive, the whole thing seems a little bizarre. You have one company (Sony) dominating the market in hardware sales, dominating the market with huge numbers of highly successful exclusive titles, dominating sales of the non-exclusive titles, and essentially choosing not to compete in the online streaming marketplace. Then you have another company (Microsoft) who is playing catch up in hardware and software sales, taking risky and innovative gambles in areas like online streaming, and that company is the target of the enforcement action. It makes sense, I guess, since Microsoft is the company trying to buy Activision Blizzard, but it’s a little unusual to have the losing company in the market being pursued for anti-competitive behavior.
Sure, I’m not saying they can’t or don’t intervene, but that there’s no automatic trigger, outside of specific situations like violating a consent decree. Whereas every merger is a trigger for potential intervention, and in practice the threshold for blocking or imposing remedies is going to be much lower than for going into an existing business and breaking it up, especially in the US for the last 40 years or so.
Would it?
What percentage of Sony’s current console base even plays CoD? Is it even a majority? I’m seeing numbers of ps5’s sold that suggest something like 32 million units.
How many total players of MW2 are there? I’m seeing around 10 million, across all platforms.
So there are a ton of people who bought the PS5, and have no interest in cod. And of the people who bought both, would they suddenly not buy ps5’s if CoD wasn’t on that platform? I don’t think even that is true, because they don’t buy that console just for that one game, and Sony has other exclusive offerings that they want to play.
Would being the exclusive home to CoD be an advantage? Of course, just like every exclusive title. That’s the point, right? World it be such an advantage as to prevent Sony’s ability to compete in the market? I do not think so, not by a long shot.
Of course, as you’ve said, ultimately this is what the courts are for. To decide these things. But I don’t think the FTC’s case here is strong at all.
There’s an interesting piece in today’s (Fuck the) New York Times about the politics behind the FTC’s approach. In particular, the following paragraph stood out to me:
One former enforcement official, who asked not to be named because his employer had not authorized him to comment, put it this way to DealBook: Regulators would rather fight to block a deal and lose than accept a compromise, because the political cost of agreement is too steep.
That could definitely explain at least some of the approach – it’s not just about the rationality of the approach, but also the politics which prevent any “fix” short of blocking the merger.
As someone who think that this deal isn’t “anti-competitive” I am not saying the FTC should not look at this deal. They need to be involved with all of these big deals asking the hard questions.
This case, while very large, doesn’t feel anti-competitive to me. The third place platform holder buying a company to become the 2nd largest games publisher doesn’t feel anti-competitive. It feels competitive. They are competing through purchasing.
The thing everyone in this thread seems to overlook is the “third biggest console maker” is also a company that has so much money they’ve been found guilty of monopoly power before. You can’t just keep saying Microsoft is this little entity that’s making videogames. They’ve got so much money in the bank they could buy ALL of videogaming.
More like Micro$oft am i right fellas?
Microsoft has 99b cash on hand as of the end of 2022.
This is a 70b dollar deal. They cannot buy “all of gaming” with the money they have in the bank.
I’m sure this is hyperbole on your part, but gaming is a wee bit larger than Microsoft’s cash reserves.
I think maybe it’s more accurate to say that Microsoft got in trouble for abusing their desktop OS monopoly with Windows, not the amount of money they had. :) So yes, they got in trouble when they leveraged the dominance of WIndows to crush Netscape in the browser arena. So “third biggest console maker” seems more relevant to me than cash on hand.
If any company were trying buy “ALL of videogaming” then I’d be a little more gung-ho for the FTC to intervene.
Regulators blocking a deal and losing vs. making a compromise is problematic. The more weak cases that are lost, the less strictly defined their loses become. Leading to further neutering of the FTC.
A conspiracy theorist could argue this is their goal since FTC chairs end up in the Private Sector working against FTC regulation.
Microsoft should be taking a look at what the litigation costs over the net three years will be versus just paying Activision for three years of exclusive rights to CoD. If in 3 years Sony is a smoking crater then the FTC was right to file suit. If Sony is still on top of console sales after three years, not so much. Of course that would mean spending billions on spite and Elon is the only one silly enough to do that.
So, would the FTC theoretically be able to step in, if say, this deal were to fall through, but Microsoft were to pay Activision for 10 years of exclusivity to xbox/pc platforms for Call of Duty?
Seriously asking a question, I know they can step in with acquisitions and mergers, but is this something that can be done with content deals?
I think if Microsoft were looking to purchase Sony or Nintendo, you’d have a case. They’re not.
That’s not to say that Microsoft isn’t being anti-competitive – that’s for experts to determine – but they’re hardly acting in a monopolistic/oligopolistic fashion by seeking to buy a major publisher.
And as others have pointed out, $99B is hardly enough to buy all of videogaming. It’s not even enough to buy Sony at today’s market prices.
Exactly. Buying Sony would be a thing, because it would directly be reducing competition by consolidating the entire market under one company.
Buying game developers to compete with Sony is not anti-competitive.
Haven’t seen this trick from spambots yet.
Might be chatgpt at work.
I mean, I have been saying, the FTC really needs to focus on the cloud infrastructure and games subscription portion of this anti-trust lawsuit.
The argument over console exclusivity is just bad, games companies have been doing platform exclusive games since before the NES. They have also been absorbing studios for nearly as long as that time. This is an argument for the 2010’s, not the 2020’s.
What games companies haven’t done is tied locking content libraries to subscription services that move beyond console platforms. That is more novel, and the FTC needs to argue that Microsoft’s game pass will be anti-competitive. I find that argument more compelling than anything else. Microsoft will definitely counter with “We are perfectly happy to put gamepass on the PS5, but Sony won’t allow it”. Which would really muddy that argument over exclusivity.
The future of gaming is not consoles, but content libraries. Microsoft understands that, and is making big purchases now, before that truth becomes more clear, and everything gets a hell of a lot more expensive.
I wonder if the outcome is that they spin off Call of Duty out of Activision, making it stand-alone? Microsoft still gets King (Candy Crush) as well as Blizzard and Activision’s other titles. Would that work for the FTC?
The CMA, which does go into detail on these points on it’s Stage 1 report, doesn’t quite argue that Game Pass/xCloud will be anti competitive, but rather that MS could leverage a) Azure and its cloud infrastructure in general, and b) ABK’s content, in anti-competitive ways to foreclose potential competitors in cloud and subscription services. I imagine they would accept behavioural remedies for that if they maintain those concerns on stage 2.