Lina Khan, the chief of the Federal Trade Commission (FTC) and a strong advocate for expanded antitrust regulation, is facing a difficult dilemma following a federal judge’s decision to allow Microsoft to proceed with its $70 billion acquisition of video game maker Activision Blizzard. The judge’s ruling dealt a major blow to the FTC, which had sought to block the transaction. This raises the question of whether Khan’s aggressive approach to fighting mergers is backfiring and actually encouraging more dealmaking.
With Microsoft nearing the completion of the deal, Judge Jacqueline Scott Corley stated in her 53-page ruling that the FTC had failed to demonstrate that Microsoft’s acquisition of Activision Blizzard would significantly reduce competition in the video game market. Furthermore, the Competition and Markets Authority in Britain, the only remaining regulator opposed to the transaction, has expressed willingness to consider settlement proposals from Microsoft. This means that the Activision deal, which is the largest tech acquisition ever, could close as early as next week.
This latest ruling represents another setback for Khan’s FTC, which earlier this year abandoned its fight against Meta’s purchase of a virtual reality start-up. In addition, the FTC suffered a defeat last fall in its own administrative court, when a judge rejected the regulator’s argument that Illumina’s $7 billion takeover of Grail, a cancer-detection specialist, was unlawful.
Despite these setbacks, Khan is unlikely to change her course, at least for now. The FTC could appeal Judge Corley’s decision, potentially focusing on the judge’s reliance on an incorrect legal standard concerning the likelihood of reduced competition. Some experts, like Robert Lande of the University of Baltimore School of Law, argue that the judge’s standard was erroneous.
Others, like Eleanor Fox of NYU School of Law, believe that Khan’s more expansive approach aligns with the actions of regulators in Europe and Britain, although EU officials cleared the Activision deal in May. However, skeptics argue that the FTC is in a weaker position, with one corporate advisor suggesting that the agency’s repeated losses are reinforcing existing antitrust jurisprudence. Anu Bradford of Columbia Law School commented that Khan is attempting ambitious actions against established ideology, and the recent ruling suggests that the courts may not be ready for such endeavors.
This emboldens dealmakers, who feel increasingly confident in pursuing ambitious deals. While many still anticipate the FTC suing to block large transactions, they believe that the agency’s repeated losses give them a better chance of winning in court.
In other news:
– Bank of America has been fined $150 million by federal regulators for withholding promised credit card perks, double-charging overdraft fees, and opening card accounts without customer consent.
– The Senate Banking Committee will hold a hearing on the possibility of more bank mergers following the collapse of Silicon Valley Bank. Treasury Secretary Janet Yellen has suggested that more mergers could strengthen the banking system, while Senator Elizabeth Warren is skeptical of this argument.
– Farmers insurance company has announced it will stop offering coverage in Florida, citing the need to manage risk exposure. This makes it the fourth insurance provider to scale back business in the state due to increased exposure to natural disasters amid climate change.
– Tesla is reportedly investigating a company-funded house for CEO Elon Musk. Known as “Project 42,” the proposal involves building an expansive glass-walled structure near the company’s Texas headquarters. Board members are reviewing the plan to determine if company funds were misused.
– The proposed deal between the PGA Tour and LIV Golf, its Saudi Arabia-backed rival, has come under scrutiny in a Senate hearing. The deal, which could see over $1 billion invested in the sport by Saudi Arabia, has faced criticism from lawmakers, and the Justice Department is expected to examine it.
– Google has been sued in a class-action lawsuit in California for alleged privacy violations and data appropriation in training its chatbot without user consent. The case demands compensation for internet users whose data was used. This lawsuit, along with a similar one against Microsoft and OpenAI, highlights the evolving understanding of the value of data in the digital economy.
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