News of Microsoft taking over a gaming company Activision Blizzard is front page news here, here and here. While the nature of the proposed merger and the prospects it has for the gaming sector and Microsoft's role in it is on one side, the anti-trust/anti-competitive issues are also at the forefront of the debate.
Some of the questions that would be asked vis a vis the proposed merger are:
1. Does it substantially lessen competition and create a monopoly like situation in favour of Microsoft in the gaming sector?
2. This appears to be a vertical integration where a hardware company seeks to acquire a software gaming company. Does the approach differ if it is a vertical acquisition as against a horizontal acquisition?
3. Should Big tech be treated in a different way than traditional mergers in non-technology sectors?
4. Would consumers be impacted by the proposed merger as there may be more concentration of market power?
The Federal Trade Commission and the Anti-Trust Wing of the Department of Justice of the US Government recently sought public comments on how to approach merger enforcement in the light of the existing guidelines. One of the areas they seek comments are specifically on the digital economy:
11. Digital Markets
a. How, if at all, should the guidelines’ analysis of mergers in digital markets differ from mergers in other markets? How should markets be defined in the case of mergers in the digital sector where products and services undergo rapid change? How should the guidelines address prospective competitive harms in rapidly evolving markets?
b. How should the guidelines analyze mergers in markets subject to tipping toward oligopoly or monopoly, such as may result from significant network effects? How should the nature and timing of enforcement strategy differ in markets subject to tipping?
c. How should the guidelines approach market definition in zero-price markets, negative-price markets, or markets without explicit prices? Can “quality” and other characteristics play the same role as price in market definition?
d. How should the guidelines evaluate mergers in two-sided simultaneous transaction platform markets? What are the competitively-relevant differences between two sided simultaneous transaction platforms and other kinds of multi-sided platforms?
e. What are the appropriate indicia of market power in complex and multi-sided markets? Are traditional market definition approaches reliable frameworks for assessing the existence and magnitude of market power in these markets? Are other tools as effective or more effective than market definition in those contexts?
f. How should the guidelines analyze mergers involving data aggregation as an important motive and/or effect? How should economies of scale and scope be measured in these cases?
g. How should the guidelines account for multihoming or interoperability? To what degree does multihoming or interoperability offset competitive concerns in actual practice?
h. How should the guidelines analyze mergers involving competition for attention? How should relevant markets be defined? What types of harms should the guidelines consider?
The question is whether the nature of the digital economy requires sui generis rules for combatting anti-competitive behaviour? Are traditional rules insufficient to address the peculiar characteristics including free products, data aggregation and interoperability that are seen in a digital market?
There are implications for international trade too. How does enforcing anti-trust rules strictly in a national setting impact competition in a global market? Is a tightly regulated internal market less advantageous vis a vis an economy that creates huge national players who compete globally? What impact do varied implementation of anti-competitive regulatory frameworks have in enhancing market share in a global market? How does the policy of creating national champions for a global market interact with anti-trust enforcement in a local context?