Microsoft-Activision ruling highlights Khan’s struggles to fight tech

When a federal judge decided on Tuesday to deny the Federal Trade Commission’s request for a preliminary injunction to block it Microsoft completion of the acquisition Activision BlizzardShe also declined to see FTC Chair Lena Khan on antitrust enforcement.

While the judge’s ruling doesn’t mean the deal is entirely clear cut, since the FTC can appeal and the UK’s competition enforcement body has also opposed the deal, it does point to the existential challenge Khan’s strategy faces to enforce in the courts.

Fighting the $68.7 billion deal was one of the FTC’s biggest ups and downs so far under Khan, who was named chairman by President Joe Biden in 2021. Khan made her first appearance in antitrust circles over her criticism of how antitrust enforcement had previously ignored potential violations. Amazon.

But even as many in Congress have become more open to a different view of antitrust in the digital age, the courts remain a major obstacle to new theories about how online companies can muster and leverage power to stifle competitors.

Justice Jacqueline Scott Corley writes that the FTC has not shown that it is likely to prevail in its administrative challenge to the merger in its internal procedures, based on the agency’s opinion that the deal is likely to significantly reduce competition. The FTC has argued that Microsoft could make some of its games exclusive to its game consoles or reduce the experience of Activision’s games on competing services if the deal closes. Microsoft said it would make the games more widely available instead.

Corley agreed with Microsoft’s view.

“To the contrary, standard evidence points to consumer access to Call of Duty and other Activision content,” she wrote.

It added that “despite the completion of extensive discovery in the FTC’s administrative proceedings, including the production of nearly a million documents and 30 filings, the FTC has not identified a single document that contradicts Microsoft’s publicly stated commitment to making Call of Duty available on Play.” Station (and Nintendo Switch)”.

The ruling means the parties are closer to being able to complete their merger by the July 18 deadline. But the FTC can still appeal, and companies still have to contend with the UK’s Competition and Markets Authority’s opposition to the deal.

“We are disappointed with this outcome given the clear threat this merger poses to unlocking competition in cloud gaming, subscription services, and consoles,” an FTC spokesperson said in a statement. “In the coming days we will announce our next steps to continue our fight to maintain competition and protect consumers.”

This isn’t the first time the judge has looked questionably at the FTC’s antitrust enforcement theories under Khan’s leadership. Also a federal judge ruled against The FTC’s attempt to block Meta’s acquisition of virtual reality fitness app maker Inside Unlimited, which the agency argued could reduce competition in an emerging market.

Khan continued to file lawsuits against tech companies who would face similar hurdles in the courts. Most notable may be the agency’s expected challenge to Amazon’s antitrust practices.

Khan’s defenders quickly criticized Corley’s decision. Matt Stoller, research director at the American Economic Freedoms Project, wrote on Twitter that Corley “changed the law” in writing that “the Federal Trade Commission must show that a merger is likely to significantly reduce competition.” Stoller noted that the relevant merger law He says the government should show “the effect of this takeover may be to a large extent to reduce competition, or tend to create a monopoly”.

“When a Biden judge — whose son works at Microsoft — allowed the biggest tech merger ever to pass, we have a serious problem with the judiciary,” Stoller wrote. Corley a statement Her son’s job, which is not in the gambling department, is at a hearing in June.

Criticisms aside, the ruling is yet another example of a judge unconvinced by Khan’s theories about how a technology company can take advantage of acquisitions in neighboring markets to hurt competition. This is the case even when the judge was appointed by the same chief who appointed Khan to the FTC.

With new digital competition laws stalled in Congress, overcoming justices’ skepticism about newer theories about enforcement of existing laws will likely remain the biggest challenge for law enforcement.

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WATCH: Judge denies FTC’s request for preliminary injunction to stop Microsoft-Activision deal