As companies such as Google and Facebook grew into giants in the early 21st century, regulators chose to have little interference with the still-young market of online services.
Now the regulator is changing course. When it comes to technology, regulators look to the future and want to beat companies to get there.
UK officials’ decision to block Microsoft’s $69 billion bid for video game giant Activision Blizzard on Wednesday marks a new approach. British officials said the main reason for rejecting the deal was how it could threaten competition in the nascent cloud gaming market, which allows users to stream their favorite video game titles.
The discussion is becoming familiar. The U.S. Federal Trade Commission, which filed a lawsuit last year to block the deal between Microsoft and Activision, also expressed concerns about competition in cloud gaming, but the agency is primarily focused on the impact on the traditional console gaming business. I was.
And this month, the FTC ordered biotech firm Illumina to sell the company it acquired, saying the deal could hurt competition in the young market of cancer blood tests. And in July, the FTC sued to stop Facebook and Instagram owner Meta from buying virtual reality startups.
Such actions are a reflection of how a government frustrated by the speed with which Silicon Valley companies seek to dominate new technology can criticize how the tech giants can stifle competition in new areas and stop it before it happens. It’s part of the way we’re trying to predict what we can do.
Diana Moss, president of the American Antitrust Association, which is funded by Microsoft, said, “Enforcers have to get ahead of the curve on this.”
Regulators’ interest in foreseeing how tech giants might harm competition stems largely from their perceived failure to do so in the past. In the 1970s and 1980s, courts and regulators made it difficult for governments to prove that acquisitions could unlawfully harm potential future competition. The court also said it is difficult to sort through the uncertainties in the young sector of the economy. As such, regulators have primarily focused on whether the deal could hurt competition in mature markets.
It is unclear whether the new predictive tack will work for regulators. In February, a judge ruled against the FTC’s attempt to block Meta’s virtual reality deal. Illumina also said it plans to appeal the agency’s order to sell the blood testing company.
Still, the power of divination by tech giants has become a central target for lawmakers, activists and regulators who claim these companies have too much influence. After claiming that the government was effectively in the driver’s seat while Google, Amazon, Meta, and Apple swelled into giants, many critics are now joining the government itself, urging it to do things differently. You are under pressure.
The biggest tech companies are racing to be the next big thing. Meta is investing heavily in virtual reality, and Apple is working on augmented reality glasses. The proliferation of artificially intelligent chatbots has rekindled the battle between Google and Microsoft for control of online search.
The FTC and DOJ declined to comment specifically on early tech interest. Microsoft declined to comment, and the British Competition and Markets Authority did not respond to a request for comment.
The lack of regulatory action during the tech giant’s boom is well documented. For example, the FTC declined to challenge Facebook’s acquisition of his Instagram in 2012 and his WhatsApp in 2014. Then, in 2020, the agency sued Facebook over antitrust concerns, claiming that these acquisitions allowed it to unlawfully cut off young competitors.
Similarly, the FTC allowed Google to acquire advertising software DoubleClick in 2007. Earlier this year, the Justice Department said Google abused its monopoly in the advertising market.
Gene Kimmelman, a former member of the Department of Justice’s antitrust staff and an advocate for tougher regulation of tech giants, said regulators in the early days of the internet were plagued by a “reluctance to predict what would happen.” He said he was.
“Fast forward 20 years and there’s a lot of critical introspection about why we didn’t know what was going to happen,” he said.
By 2021, regulators are looking to future markets. That year, the FTC sued in internal court to block his Illumina acquisition of Grail, which detects cancer in blood tests. An internal court judge ruled in favor of Illumina, which had already taken the unusual step of entering into a contract.
This month, the FTC voted to overturn a judge’s ruling, demanding that Illumina sell Grail. Illumina plans to appeal this decision to traditional federal courts.
Last year, the FTC sued Meta to block its acquisition of VR fitness game creator Within, saying it would undermine competition in the so-called Metaverse market, where users play, work and interact in virtual worlds. . In February, a judge refused to temporarily suspend the execution of the contract, and the agency waived its challenge.
In trying to block Microsoft’s takeover of Activision, the largest consumer tech deal since AOL bought Time Warner decades ago, UK regulators slammed the deal against the now niche market of cloud gaming. I paid close attention to the impact of
Officials say cloud gaming will be worth $13.7 billion globally by 2026, worrying Microsoft already controls 60-70% of current services. Microsoft also has the tools to operate the entire cloud gaming ecosystem, from its Azure cloud system to Xbox services, the agency said.
However, cloud gaming is still in its infancy, and there is no guarantee that this computing power-hungry and often glitchy technology will become mainstream. Revenue from subscription services that exclusively offer cloud gaming is expected to hit about $288 million worldwide this year, according to London firm Ampere Analysis.
Piers Harding-Rolls, games researcher at Ampere Analysis, said: “There’s some justification for that, but it’s hard to predict. It’s a very dynamic space.”
Antitrust authorities appear to be eyeing other emerging technologies as well. At an event in March, Justice Department Chief Antitrust Law Enforcement Officer Jonathan Kanter and his FTC Chairman Rina Khan said AI products like ChatGPT could be transformative, and that technology He said he believes the time is ripe for major dominance.
“This is another migration we are looking closely at,” Khan said. Tactics to lock up the market. ”
