The frustration must be strong. With the storm in global tech, the time has never been better for startup takeovers. But the mammoths of American tech must be content to watch these bargains from afar. Because after living in royal peace for years, now they have to answer to the new sheriff in town: Lina Khan, president of the FTC, the American competition authority.
And since her arrival in September 2021, the young thirty-something has been sending a very clear message: shopping is over. Microsoft is one of the first to pay the price. The group has been on cloud nine since signing a colossal $69 billion deal with Activision.
This takeover, which caused a stir in tech, should allow him to get his hands on one of the most popular video game catalogs (Call of Duty, Diablo, Overwatch, etc.), but also to acquire strategic skills on the long term. All the tech giants are indeed preparing for the metaverse revolution and video game publishers are key players in building these new immersive worlds.
The group led by Satya Nadella is disillusioned this week. The FTC announced on December 8 that it was initiating proceedings aimed at blocking this takeover. His fear? That by acquiring Activision, Microsoft (which is also the maker of the Xbox) “harms competition in the field of high-performance consoles and game subscriptions by denying or degrading the access of its rivals to this popular content,” says authority in its statement.
“FTC Complaint Is Based on Ideology”
Microsoft is not Lina Khan’s only target: Meta is also in her line of fire. In July 2022, the US competition authority initiated proceedings to block its takeover of Within, the studio behind the popular virtual reality fitness app Supernatural. All while lamenting that Meta is trying to redeem the competition rather than compete against it.
“The FTC’s complaint is based on ideology and speculation, not fact. The idea that this acquisition would create an anti-competitive climate in a sphere as dynamic, with as many new players and growth, as online and connected fitness is simply not credible. The FTC sends a chilling message to all those who wish to innovate in the field of virtual reality”, lamented then Nikhil Shanbhag, VP and associate general counsel in charge of competition and regulation at Meta, in a press release.
The outcome of these two cases is far from certain. If the FTC misses this part, Lina Khan’s aggressive approach to the industry is going to be seriously challenged. But if the American behemoths lose this battle, it will send a very clear signal to the sector. And the major projects of the digital giants will become difficult to carry out. This is particularly the case for the company of “Zuck” which urgently needs to reinvent itself, while its historic Facebook network is losing ground among young people.
Its takeover of Instagram in 2012 bought it time in the hearts of teens, but now that TikTok is blowing its neck, Meta really needs to shine on the innovation front. And if the company does not have the possibility of taking out the checkbook to move quickly on its metaverse, it will have to innovate internally. An area in which Meta has not shone much in recent years. Despite remarkable advances in certain areas (notably AI), many of the features it has experimented with recently have not won over the public. The curse of the mammoth that has become too big to change course?