Microsoft has a mission. It wants to purchase Activision Blizzard, the company behind some of today’s biggest video games. To achieve that mission, Microsoft faces a real-life boss battle: a lawsuit from the Federal Trade Commission.
The Federal Trade Commission (FTC) exists to protect competition between businesses. It prevents companies from bending the rules for gain. In other words, the FTC helps keep the free market free.
In recent years, the FTC blocked some major tech company mergers (businesses buying up other businesses). Some mergers risk creating monopolies. In a monopoly, one company has near total control of an industry. Where monopolies exist, competition dies. Without competition, prices may rise above what consumers can pay. Access to products and services can become scarce. Innovation slows down.
What might happen to the video game industry if one company buys all the games?
Today’s biggest gaming industry rivals are Sony’s PlayStation and Microsoft’s Xbox. Their real competition has gone online. Players pay to stream favorite games through subscription services like Microsoft’s Game Pass.
How do these services get games? Sometimes they license them from developers. Other times, they buy the developers themselves. When a company like Microsoft buys a game developer, it might let other companies license the games. Or it might keep the games for itself.
That’s what the FTC worries may happen if Microsoft purchases Activision Blizzard. Microsoft says it will let other companies license some of Activision Blizzard’s biggest games. But when Microsoft purchased Bethesda—another game developer—it made several games exclusive to Xbox and Microsoft PC.
Why all the fuss over games? Video games have grown into a larger industry than movies and music combined. At $69 billion, the Microsoft merger would be one of the most valuable mergers in tech industry history.
Some believe the FTC needs to stop the merger to protect competition. “Corporate monopolies have had free rein to hike prices and harm workers,” says U.S. Senator Elizabeth Warren. “But now the Biden admin is committed to promoting competition.”
Others believe FTC intervention makes the market less free. They claim the Microsoft merger will promote competition, not hinder it. “The allegation that this deal is anti-competitive doesn’t align with the facts,” says Activision Blizzard CEO Bobby Kotick.
God commends governments that make wise judgments and treat people justly. The FTC and its opponents both say they want a free, fair market. But they disagree on what makes a market free.
It will take more than one lawsuit to resolve the dilemma. Microsoft might win this boss battle—but the game is not over.
Why? Governments should protect people from some harmful practices. But without wisdom, protections can take away freedoms.
View a bubble map that shows how one event (such as Microsoft buying a game company) can lead to another.