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

When a federal judge decided Tuesday to reject the FTC’s proposed preliminary injunction to block Microsoft Since the completion of the acquisition Activision BlizzardShe also rejected FTC Chairman Lina Khan’s vision for antitrust enforcement.

While the judge’s ruling doesn’t mean the deal is all clear, as the FTC can appeal and Britain’s competition enforcer also opposes the deal, it suggests that Khan’s enforcement strategy faces an existential challenge in court.

Fighting the $68.7 billion deal is one of the biggest shifts for the FTC under Khan. Khan was named chairman by President Joe Biden in 2021. Khan first emerged in antitrust circles as she criticized antitrust enforcement agencies for ignoring potential abuses. amazon.

But even as many in Congress have become more open to differing views on antitrust in the digital age, the courts still pose significant obstacles to new theories about how online companies accumulate and use power to suppress competitors.

Judge Jacqueline Scott Corley wrote that the FTC had not indicated that it could win an administrative challenge to the merger in its internal process because it believed the deal might Dramatically reduce competition. If the deal goes through, Microsoft could make some of its games exclusive to its own consoles, or dilute Activision’s gaming experience on rival services, the FTC said. Microsoft says it will make these games more widely available.

Corley agrees with Microsoft.

“Instead, there is documented evidence of greater consumer exposure to Call of Duty and other Activision content,” she wrote.

She added, “Despite the extensive investigation completed in the FTC’s administrative proceedings, including the production of nearly 1 million documents and 30 testimonies, the FTC has not found a single document that is consistent with Microsoft’s public and Nintendo Switch).”

The ruling means the two sides are moving closer to completing the merger by the July 18 deadline. But the FTC can still appeal, and the company still has to deal with opposition to the deal from Britain’s Competition and Markets Authority.

“Given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles, we are disappointed by this outcome,” an FTC spokesman said in a statement. “In the coming days, we will announce The next step is to continue our efforts to preserve competition and protect consumers.”

This isn’t the first time a judge has cast doubt on the FTC’s antitrust enforcement theory under Khan.federal judges also ruled against The FTC is trying to block Meta’s acquisition of virtual reality fitness app maker Within Unlimited, which the agency says could reduce competition in emerging markets.

Khan continues to file lawsuits against tech companies that will face similar hurdles in court. Perhaps most notable is the agency’s anticipated challenge to Amazon’s antitrust practices.

Khan’s defenders were quick to criticize Kohli’s decision.Matt Stoller, Research Director, American Economic Freedom Project wrote on twitter Corley “changed the law” in writing that “the FTC would have to show that the merger is likely to substantially reduce competition.” Stoller pointed out, related merger method Said the government would have to demonstrate that “the effects of such a takeover would be likely to substantially reduce competition, or tend towards the formation of a monopoly.”

“When a Biden judge — whose son works for Microsoft — lets the largest tech merger ever go through, we have serious problems with our judiciary,” Stoller wrote. Corley disclosed Her son’s job was not part of the gaming department at the June hearing.

Regardless of the criticism, the ruling is another example of the judge’s disbelief in Khan’s theory of how tech companies use acquisitions in adjacent markets to harm competition. This is the case even though the judge was appointed by the same president who appointed Khan to the FTC.

As new digital competition laws stall in Congress, overcoming judges’ skepticism about new theories about how existing laws apply may remain enforcers’ biggest challenge.

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WATCH: Judge rejects FTC’s request for preliminary injunction blocking Microsoft-Activision deal