The Federal Trade Commission’s embarrassing antitrust crusade

Lina Khan is one of the most radical chairs of the Federal Trade Commission (FTC) the United States has ever seen. Luckily for consumers, Khan has not been very successful. The latest evidence comes from San Francisco, where Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California is presiding over the FTC v. Microsoft & Activision Blizzard’s preliminary injunction hearing.

The suit was brought on by the FTC over its expressed antitrust concerns for the burgeoning cloud video gaming industry. It’s not going well, and it’s because Khan is not guided by the traditional metrics of consumer protection and welfare that have long characterized the FTC’s approach to antitrust enforcement.

Coming off a predictable defeat in court against Meta over its bid to acquire the virtual-reality fitness company Within, President Biden’s antitrust warrior appears to have learned little. The FTC chair’s approach to blocking Meta’s purchase was to harken to an ominous “campaign to conquer VR” by Mark Zuckerberg, based on his previous acquisition of Oculus for the purpose of developing Meta’s capacity for VR headsets.

Where most see these tech acquisition deals as a simple matter of comparative advantage for companies looking to serve consumers better products at better prices, Lina Khan appears to see only the phantom of Standard Oil magnate John D. Rockefeller. It’s why her agency has adopted a more radical posture around antitrust policy, expanding its view of what constitutes unfair competition in a 2022 policy statement to include Yale-worthy buzzwords “exploitative, collusive, abusive” in its framework for identifying antitrust violations. The vagueness is the point.

In the minds of progressives like Khan who romanticize the antitrust battles of the early 20th century, they’re carrying the banner against predatory price schemes and corporate monopolies. However, in nearly every fight Khan’s FTC has picked with big business (Amazon, Meta, Microsoft) since 2021, Khan has demonstrated what she wrote in the Yale Law Journal in 2017, that, “Animating these critiques is not a concern about harms to consumer welfare, but the broader set of ills and hazards that a lack of competition breeds.”

Khan fears corporate expansion (“powers we oppose”) of all kinds and believes it is the role of the federal government to erect obstacles and throw stones to slow their efforts, even when consumers are voting enthusiastically with their dollars for exactly what the tech sector is offering.

In the case of FTC v. Microsoft & Activision Blizzard, Khan’s first week in court has been an embarrassment. At issue is whether or not Microsoft absorbing Activision-Blizzard presents a unique threat to competition within the cloud gaming space. Some video game companies keep their licensed games within the walled gardens of their console, such as Nintendo with access to Mario Kart or The Legend of Zelda. Others license their games cross-platform, such as Activision and their top hit, Call of Duty. For reasons unknown, the FTC has made it their mission to ensure that PlayStation, a Japanese company, has ready access to Call of Duty for its users.

Microsoft has offered a number of long-term licensing deals during this process to display good faith and disinterest in cutting off Sony from its major titles. It’s bad business for both parties. At the outset of the hearings, it was revealed via internal emails from within Sony, the unquestioned global leader in video game consoles and chief advocate of the FTC’s crusade, that they didn’t really care much at all about Call of Duty. In the words of Sony CEO Jim Ryan about Microsoft-Activision, “I don’t want a new Call of Duty deal. I just want to block your merger.”

Sony is who the FTC is working to protect, and American consumers should wonder why.

If the federal government is trying to block a company from being acquired, typically that company’s stock price doesn’t go up — but Activision’s has. That’s because, for almost everyone watching, it has become clear that Lina Khan’s FTC is not bringing a case to protect American consumers from corporate predation or an uncompetitive marketplace, but instead to merely make their presence known.

This is how chaperons act on a school field trip or middle school dance; they just want you to know they see you. Only in this case, “being seen” means millions in legal fees for all parties involved, including the public, who foots the bill for proceedings. 

It’s trolling on a multimillion-dollar government budget, and while it’s beneath the dignity of an institution dedicated to a level playing field for businesses and consumers alike, it’s very much on brand for Lina Khan.

Stephen Kent is the media director for the Consumer Choice Center, editor of This Is The Way on Substack and author of “How The Force Can Fix The World.”