Microsoft’s Activision Bid to Draw Scrutiny Across Regulatory Agencies and on Capitol Hill

And now — or very soon — get ready for the regulatory gaze to be more fully trained on Microsoft and Big Tech mergers.

And maybe hearings on Capitol Hill.

Microsoft’s bid to buy Activision for as much as $69 billion is a push well beyond gaming (especially mobile gaming).

Read more: Microsoft to Buy Activision Blizzard for $75B, CEO Expected to Step Down

It’s a bet on the nascent metaverse, too, a 3D world of immersive activities that blend with virtual reality (VR) and augmented reality (AR).

We may be headed to a future in which gamification is a notable feature of everyday activities spanning commerce and work (and, yes, leisure time).

See more: Is the Metaverse Gaming, Commerce or Escapism?

When deals on this scale happen, it begs the question as to what happens to the competitive landscape — in this case gaming. By buying Activision, Microsoft, which already makes a key hardware mainstay of the gaming universe — the Xbox console — now would bring into its folds a slew of gaming titles such as “World of Warcraft” and “Call of Duty.” In a way, this is a form of vertical integration, where the disparate pieces of production across a business vertical (in this case gaming) are gathered under one corporate umbrella.

And that may be enough to bring Microsoft to the same level of regulatory scrutiny that has been seen with Big Tech brethren, such as Google, Apple and others.

Now, this deal is arguably not on the “level” of the antitrust concerns that were a focal point of the Department of Justice (DOJ) suit that was lobbed against Microsoft in the late 1990s. Back then, Microsoft was sued over its business practice of Explorer, the browser, for free with the Windows operating system. The case was settled in 2001; Microsoft made it easier for the competition to gain a foothold on Windows properties.

The DOJ and the FTC

Interestingly, the same day that the Microsoft-for-Activision deal was announced (Jan. 18), the government seemed to signal what may be on the horizon.

The DOJ and Federal Trade Commission (FTC) said they would launch a review of merger guidelines (with public inquiry open until March of this year) in order to pinpoint “unlawful” consolidation.

In the announcement of the joint public inquiry, the agencies said that among the topics under review are whether distinctions between horizontal and vertical transactions should be reworked “in light of trends in the modern economy.” The review will also look at whether concentration thresholds “should be adjusted to improve the efficiency and effectiveness of enforcement” and “whether alternative metrics or qualitative factors should also trigger presumptions of competitive harm.”

The DOJ/FTC announcement did not specifically single out Microsoft’s proposal to buy Activision. But it does serve as a reminder of all the various antitrust actions on the table and likely to come in the months and years ahead against some of the marquee names within the technology space.

Among just a few examples, the FTC now has a second chance to continue with its allegations of illegal monopolization against Facebook (now Meta). The FTC wants Meta to unwind its acquisitions of Instagram and WhatsApp due to concerns over monopolization. The deals have faced similar scrutiny (and fines) in Europe. Elsewhere, the FTC is moving forward with an investigation into Amazon Web Services (AWS), the Amazon cloud computing business, over competition issues.

Read more: FTC Moves Forward With Amazon Web Services Investigation

Elsewhere, the DOJ has been training its sights on suing Google over digital advertising. Last year, dozens of states and the District of Columbia sued Google over its mobile app store’s business practices.

See more: Justice Department Said to Be Readying Google Antitrust Ad Tech Lawsuit

Congress Too

For the platforms, and for the mergers themselves, Congress is almost certain to take a bigger role in policing Big Tech’s data collection and competitive practices. As noted in the fall, a group of U.S. state attorneys general sent a letter to lawmakers to urge them to pass bills to make antitrust laws stronger.

Read more: Attorneys General Ask Congress to Regulate Big Tech

A bipartisan bill that would make it more difficult to complete Big Tech mergers has been introduced in the U.S. Senate. Earlier in the year, Sen. Josh Hawley introduced a bill designed to strengthen antitrust enforcement. Hawley’s bill would prevent all mergers and acquisitions for companies valued at more than $100 billion.

See more: Bipartisan Bill in US Senate Aims to Hinder Big Tech Acquisitions

For Microsoft, the regulators and lawmakers may well come knocking at the door for a chat.