FTC Chair Lina Khan Asked About Microsoft – Activision Deal In US Gov’t Hearing

The Microsoft – Activision deal has come up again in the most unlikeliest of situations – a US House Committee hearing. It probably won’t be a surprise, though, if I told you this hearing involves FTC chair Lina Khan.

The US House Committee on Energy and Commerce uploaded a YouTube of a three hour hearing titled IDC Subcommittee Hearing: “Fiscal Year 2024 Federal Trade Commission Budget”. In short, Lina Khan was asking for a higher budget for the FTC, and she got called by the House Committee to talk about her request.

What Lina did not expect, however, is that her actions would receive severe criticism and probing by the House Committee members.

The substance of the hearing is beyond the scope of our sphere of interest, that being Lina’s actions on the Microsoft – Activision deal. We will share here that some accounts that were reported by the New York Post, and read back to Lina in this hearing, described her as ‘abusive, and a tyrant’, and leave it at that.

As caught by YouTuber Destin Legarie, in a brief portion of this hearing, Tennessee representative Diana Lynn Harshbarger directly asked Lina Khan about the Microsoft Activision deal.

We’re sharing Destin’s tweet here, so you can watch the clip, but we will also share a transcript below:

“Harshbarger: I say we can all agree that competition law is supposed to protect an industry from stronger players.

Khan: Correct.

Harshbarger: In light of that, I find it curious the FTC is taking action to protect Sony, which has 68 % of the global market for high-end video gaming consoles, from competition, by attempting to block Microsoft’s proposed acquisition of Activision Blizzard King.

As you know, Sony has been the most vocal opponent of that deal. Remarkably, the FTC has sided with Sony. Can you explain why?

Khan: This case has also been voted out and is in administrative proceedings, so I’ll let the complaints speak for itself.

I will say as a general matter, we always really benefit from market participants from across the board, including big players. But at the end of the day, we always make our own independent judgements based on the law and the facts.”

To reiterate, this hearing wasn’t about the Microsoft – Activision deal itself, or Microsoft or Sony in particular. Khan’s supervisors are skeptical of her request to grant the FTC a bigger budget, because of her recent actions. The Microsoft – Activision deal is definitely one of those situations the House is investigating.

At this point, it’s pretty clear that the US government, particularly their legislature, has taken a real interest in the Microsoft – Activision deal. It’s not just one or a handful of senators or congresspeople. A lot of people in the government are talking about this as a real issue.

As a US company, Microsoft employs thousands of Americans. Unfortunately, we ourselves had to report the rounds of layoffs Microsoft started this January and are set to continue.

While some people may point to conditions in the tech industry and Microsoft’s direct responsibility in this matter, these senators and congresspeople are looking at jobs in their states, and some of those jobs are gone, and perhaps some are in peril. Some of those jobs were at Microsoft’s game studios, such as Bethesda, 343 Industries, and The Coalition.

So they have a clear interest in how Microsoft’s business is doing, that would be independent if they had been lobbied to by Microsoft or Sony, or other tech companies.

This certainly looks like it’s only the beginning of the US government’s investigation, and possible intervention, of what they now call the high-end gaming market. Just last week, a US senator wrote Sony directly about this situation, asking the company to share their information. We will definitely be seeing more news of the US government inquiring about this situation. Microsoft, Epic, and Valve are definitely watching this wondering if this will all lead to a greater gov’t intervention.