When President Biden took office, he sent several signals that he was ready to take on more corporate concentration. Among the clearest was the appointment of consumer advocate Lina Khan, a leading critic of monopoly power, to head the Federal Trade Commission.
Instead, the acquisitions have persisted under Biden’s watch. The latest evidence was presented last week that reducing corporate concentration will be more difficult than Biden might have expected: US courts rejected the FTC’s attempts to stop Microsoft from taking over video game company Activision Blizzard. Microsoft could finalize the deal in the coming months; a key deadline was extended this week.
The merger would be by far the largest ever in video games, after adjusting for inflation. The gaming industry now represents a significant part of the economy. It’s bigger than music, US book publishing, and North American sports combined. Microsoft’s gaming division and Activision Blizzard make more money annually than all movie theaters in the United States. The two companies are among the biggest in gaming, as this chart by my colleague Ashley Wu shows:
The FTC said the Microsoft-Activision merger was anticompetitive and filed a lawsuit to stop it. The agency argued that the merger would give Microsoft, maker of the Xbox game console, too great an advantage over rival PlayStation maker Sony. Of particular interest was Activision’s massive franchise, Call of Duty. A new edition of Call of Duty is consistently one of the best-selling games on Xbox and PlayStation every year. But if Microsoft owns Call of Duty, it could make the game exclusive to Xbox and rob Sony of one of gaming’s biggest draws.
To address those concerns, Microsoft promised that it would put Call of Duty games on PlayStation for 10 more years. That was one of the reasons the courts ruled against the FTC: They found that the agency had failed to show that the settlement would likely hurt competition.
With their ruling, the courts are allowing another huge merger that will further consolidate a major industry. Many experts say the trend is ultimately hurting consumers by lessening the kind of competition that lowers prices and improves the quality of goods and services, even if the FTC couldn’t prove all of that in this case.
concentrated power
let’s get away In recent decades, markets have become more concentrated. The largest companies dominate most industries, as this chart shows:
Why does this matter? In simple terms, a lack of competition allows companies to lower wages, raise prices, and dilute the quality of their products. A classic example is Internet service: Many Americans live in places with only one or two providers. These companies keep prices high, the internet can be spotty, and customer service is often poor. Since customers have no alternatives, providers can get away with such failures.
Corporate merger deepens that kind of problem, the experts say. One economist concluded that market concentration costs the typical American household more than $5,000 a year. Progressives like Khan have argued that regulators need to take the issue more seriously.
The courts back down
The Biden administration released guidelines this week seeking to toughen antitrust law, which restricts anti-competitive practices. Under Khan, the FTC has also pressed courts to effectively reduce the burden of proof required to show that a merger is anticompetitive. There is merit to that approach, some experts argue: US courts have raised the bar very high in recent decades, exceeding the standards of the UK and much of Europe.
“We can convict someone and send them to prison for murder based on circumstantial evidence,” said Douglas Melamed, an antitrust expert at Stanford Law School. “But it often seems that the courts will not allow plaintiffs to win an antitrust case based on circumstantial evidence.”
The FTC has yet to persuade the courts to soften their standards. The agency’s loss in the Microsoft-Activision case is the latest example. It also failed to block Meta’s acquisition of a virtual reality company, Within. And it has even lost in its own administrative court, which ruled in favor of the gene sequencing company Illumina in its acquisition of the firm Grail.
Khan’s cause still has potential. The last big change in antitrust law, in the 1970s, came after decades of work by conservatives to push the law and the courts in their direction. The movement that Khan helped popularize among progressives is only a few years old. If he convinces more of the public and, more importantly, the judges, he might eventually succeed.
Related: The FTC’s losses have raised new questions about Khan’s strategy. “All these legal losses are making his threats look more like a paper tiger,” said one chief executive.
International
-
Britain’s Conservative Party lost two seats in a special parliamentary election, an ominous sign for Prime Minister Rishi Sunak’s political future.
-
The war has aggravated the suffering of Ukrainian children with cancer.
-
Under a dense forest in Mexico, archaeologists have discovered the ruins of a Mayan city with lasers.
other great stories
Opinions
The burden of medical paperwork is delaying care and making patients sicker, Dr. Chavi Karkowsky writes
About him “A Question of Opinion” PodcastTimes writers share their summer book recommendations.
Here are columns by Nicholas Kristoff about the sex trade and gail collins About Joe Manchin.
MORNING READINGS
Where we are: Young Arab Americans find community at a hookah lounge in Dearborn, Michigan.
“Am I training my replacement?”: Call center workers are facing the threat of AI to their jobs.
modern love: A father lost his memory but gained recognition of his son’s gender.
lives lived: After being discharged from the US Army in 1963 for being a lesbian, Lilli Vincenz became an early advocate for gay rights in an era before the Stonewall riots. She died at 85.
WOMEN’S WORLD CUP
Older players once relied on MapQuest printouts. A younger one has never used a CD player. Team USA has a generation gap to overcome as they open the tournament tonight against Vietnam.
Vietnamese women are representing a country obsessed with football in his first World Cup.
The US will take home more money than any other team, no matter how it ends, due to its labor agreement with the US Soccer Federation.
After losing their star player, Sam Kerr, to injury, Australia beat Ireland 1-0. Canada, one of the main contenders, battled Nigeria to a goalless draw. And Spain beat Costa Rica, 3-0.
OTHER SPORTS NEWS
Change of hands: NFL team owners have approved the sale of the Washington Commanders and fined outgoing owner Daniel Snyder $60 million after an investigation found he had harassed a former cheerleader. It was the largest penalty ever imposed against the owner of an NFL team.
The NFL coach leaves: Kevin Maxen, associate coach for the Jacksonville Jaguars, is believed to be the first openly gay men’s coach in major American men’s professional sports.
ARTS AND IDEAS
Translate between cultures: Japanese comics, known as manga, are popular in the US But translating them for a Western audience is tricky, write Gabriel Gianordoli and Robert Ito. In Japan, books must be read from right to left. And the pages are often filled with sounds: there are thousands of onomatopoeic words in Japanese, many more than the usual “pow!” American comics.
More about culture
-
Fans say that John Mayer’s facial expressions when he plays the guitar are almost as passionate as his music.
-
With six-figure twists and risqué text messages, Bitsy von Muffling’s character in “And Just Like That…” evokes Samantha Jones from the original “Sex and the City.”