The Federal Trade Commission’s Antitrust Lawsuit Against the Proposed Microsoft/Activision Merger: Déjà Vu with a Surprise Ending

Abstract

In 2018, the United States Department of Justice filed an antitrust lawsuit against the $80–100 billion merger between AT&T (a major cable provider) and Time Warner (a major content provider). The government predicted that the merged company would foreclose content to competitors, raise content prices, and slow innovation. The government lost the case because the court did not accept its theory that the merged company would enjoy increased bargaining leverage that would disadvantage competitors by offering the merged company’s content at increased consumer prices. In 2022, the Federal Trade Commission (FTC) offered a similar rationale in seeking to block the Microsoft/Activision Blizzard’s $68.7 billion merger. This paper compares and contrasts the two mergers, as well as three vertical merger cases that occurred around the same time of the closing of Microsoft/Activision, with the intent of highlighting the issues with assessing vertical mergers, with particular focus on online industries.