How European tech regulators set the rules for US giants
Christopher Hutton
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A British regulator’s decision to block Microsoft’s acquisition of the gaming company that makes Call of Duty has put the sale on hold, illustrating how antitrust decisions in foreign nations affect the economy of the United States.
The United Kingdom’s Competition and Markets Authority announced last month that it was blocking Microsoft’s $68.7 billion acquisition of Activision-Blizzard on the grounds that the combined company would have a monopoly over cloud gaming. While Microsoft is expected to appeal the decision, the repercussions of the decision, for now, reach worldwide.
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The action also illustrates the move in the United States away from the “consumer welfare” standard that has underpinned antitrust enforcement for four decades and toward a model closer to that in use in the U.K. and European Union.
“The current philosophy emerging from the Department of Justice and the Federal Trade Commission is starting to look a lot more European,” Mark Jamison, a nonresident senior fellow at the American Enterprise Institute, told the Washington Examiner. AEI is a conservative think tank.
There are two distinct approaches when it comes to the application of antitrust law, Jamison noted. For the previous 40 years, under Republican and Democratic leaders, U.S. antitrust enforcers focused specifically on how deals affected the consumer.
FTC Chairwoman Lina Khan has been challenging this interpretation since her appointment by President Joe Biden. Khan is considered a leader of the “hipster antitrust” movement, which looks beyond the consumer welfare standard and considers the effects of a given transaction on corporate concentration, income inequality, and other variables.
The U.K. acted in a similar vein in determining that Microsoft’s acquisition of Activision-Blizzard would significantly diminish the number of competitors in the marketplace.
The Khan-led FTC has staked out a stance similar to that of European regulators in recent lawsuits. It argued in its own suit meant to block Microsoft from acquiring Activision-Blizzard that the deal could create a monopoly because it would allow Microsoft to make the popular shooter Call of Duty an Xbox exclusive, which could hurt other console gaming companies and harm other companies’ ability to compete. Microsoft has denied these claims and repeatedly stated that it intends to continue sharing the new Call of Duty games with other companies.
“A big issue we’re dealing with is like a lot of the speech laws in the U.K. and EU,” Jeffrey Westling, the Director of Technology and Innovation Policy at the American Action Forum, told the Washington Examiner. “They’re going to affect kind of how some of these platforms release their systems as a whole. And that’s not necessarily a bad thing. But, like, we have a stronger First Amendment than many countries do.” The AAF is a conservative-leaning think tank.
The shared skepticism of mergers between the U.S. and European regulators has led Khan’s critics to raise the fear that they are engaging in undue coordination. The U.S. Chamber of Commerce asked the White House in April to intervene against the FTC and the Department of Justice on the grounds that they were “preparing to help foreign governments implement protectionist policies that directly harm U.S. companies.”
The influence of European policy can be seen through how a company responds to two contrasting orders regarding from regulators there and in the U.S., Westling said, such as in the case of the E.U. decision earlier this year to force Apple to allow third-party app providers, or sideloading, through the Digital Markets Act.
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The decision would go contrary to the 2021 Epic v. Apple court decision, in which a federal judge in California ruled that the Big Tech platform was not maintaining a monopoly by keeping its App Store regulated. It is unclear if Apple will only allow sideloading in the E.U. or if it will do so in the United States, but Westling said that the E.U. decision would usurp the California one if it did.
It’s unclear how the U.K. block of the Microsoft acquisition will affect the FTC’s case against Microsoft. The two cases deal with two different aspects of the deal, even if they are related to the same deal.