The Microsoft and Activision Blizzard deal is being scrutinized for the wrong reasons

outlast2023

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the FTC meeting with CMA 2 weeks before the decision and CMA going dark on Microsoft for 2 weeks sounds like anything but coincidence, obviously the FTC knew that Microsoft will close the deal without them and that led them to manipulating the CMA into blocking the merger.
 

GraniteStateColin

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Great article overall, and many, many solid points here. I completely agree with the poor reasoning by the regulators. However, I take issue with one piece toward the end, best summed up in the line: "Scrutinization is absolutely needed to prevent companies from exploiting their positions and harming consumers in the name of more profits..."

I don't think people who haven't run a business appreciate the massive destructive power of excessive government regulation. Profit is not a bad thing. While that's a common trope, it's one borne of ignorance. Profit is the reward companies get for serving customers well and its pursuit is why companies take the risk with their existing money to gamble on innovations, many of which fail. Government regulators have a mission to protect consumers, but in nearly all cases, what they do instead is harm businesses, which raises costs, kills jobs, and slows innovation.

There is no positive to what the FTC or CMA or EU is doing here. The only winners to their actions are the bureaucrats who work for those agencies, gaining praise for the scalps they claim and the businesses protected by their regulations (primarily companies like Sony and Tencent).
 

blaznxboxboy

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FAntarctic article, I read the entire thing, but I disagree with you on government regulations. Many of the reasons these massive companies exist in the first place is government regulations. For example. Patents, trademark, IP laws are a great example of this. When you break it down, these are all supposed to be part of our free speech, the 1st ammendment. However they were made into profit making machines, and classified as property, all for the sake of companies. These companies used "innovation" as the reason why these laws and regulations had to exist, but there hasn't been any real proof that getting rid of these laws would hurt innovation. Alot of hypothetical examples, but no real solid proof. If you think about it, humanity has continued to evolve without such nonsense laws. These laws only enabled companies to become as big as they are today and to concentrate profit in the hands of a few.

You should realize that government isn't for the people. Well, maybe underneath all the bs they are. But that goal is deep underneath all the fat. Many Many layers deep. Even something globally life altering like climate change is regulated at a snails pace and keeping the dominant companies profits in mind. Let that sink in for a minute. We knew about global warming since the 1800s, and it took 200 years to even acknowledge the problem. Why?? Because of profit.

So just remember the real reason for alot of the problems we have in this world come down to money and profits. The government is no exception, they're all bedazzled by money and profits. Every human on this earth is...and that my friends is a problem.

This deal getting blocked is also coming down to profit as a reason. Microsoft makes less money than Sony in the gaming sector, and they contribute less profit and tax revenue to the sector. If Microsoft succeeded, their less profitable gamepass would have taken away from Sony, and it would have hurt tax revenue.
 

GraniteStateColin

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FAntarctic article, I read the entire thing, but I disagree with you on government regulations. Many of the reasons these massive companies exist in the first place is government regulations. For example. Patents, trademark, IP laws are a great example of this. When you break it down, these are all supposed to be part of our free speech, the 1st ammendment. However they were made into profit making machines, and classified as property, all for the sake of companies. These companies used "innovation" as the reason why these laws and regulations had to exist, but there hasn't been any real proof that getting rid of these laws would hurt innovation. Alot of hypothetical examples, but no real solid proof. If you think about it, humanity has continued to evolve without such nonsense laws. These laws only enabled companies to become as big as they are today and to concentrate profit in the hands of a few.

You should realize that government isn't for the people. Well, maybe underneath all the bs they are. But that goal is deep underneath all the fat. Many Many layers deep. Even something globally life altering like climate change is regulated at a snails pace and keeping the dominant companies profits in mind. Let that sink in for a minute. We knew about global warming since the 1800s, and it took 200 years to even acknowledge the problem. Why?? Because of profit.

So just remember the real reason for alot of the problems we have in this world come down to money and profits. The government is no exception, they're all bedazzled by money and profits. Every human on this earth is...and that my friends is a problem.

This deal getting blocked is also coming down to profit as a reason. Microsoft makes less money than Sony in the gaming sector, and they contribute less profit and tax revenue to the sector. If Microsoft succeeded, their less profitable gamepass would have taken away from Sony, and it would have hurt tax revenue.
You have a strange view on regulation: the guaranteed right to free speech is not a regulation, it's a limit on government regulation. The Bill of Rights in the US Constitution (obviously not applicable in the UK or EU, two of the regions at various stages of fighting Microsoft on the ABK acquisition) protects the people FROM GOVERNMENT by placing hard limits on what laws (and therefore regulations) it can pass to limit the liberty of the people. That's the sole purpose of the Bill of Rights.

Also, you talk about pursuit of profit as if that were a bad thing. If someone steals or defrauds or otherwise commits a crime for money, yes, they should be punished for that crime. But the pursuit of profit can also be done ethically as most entrepreneurs and businesses seek to do every day. That pursuit of profit is responsible for most (not all) technological advances over the past 500 years, from Galileo's telescope to the ability to mass produce anything (needed for nearly every packaged item you can buy in a store or online), to the fact that humans can grow enough food for the entire 7B+ population when 150 years ago it was well "known" that there was no way the planet could ever feed even 1B people, to the microchip, to the cell phone. Profit is the reward companies get for serving customers by offering something better than their alternatives.
 
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Captain_Eric

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Great article overall, and many, many solid points here. I completely agree with the poor reasoning by the regulators. However, I take issue with one piece toward the end, best summed up in the line: "Scrutinization is absolutely needed to prevent companies from exploiting their positions and harming consumers in the name of more profits..."

I don't think people who haven't run a business appreciate the massive destructive power of excessive government regulation. Profit is not a bad thing. While that's a common trope, it's one borne of ignorance. Profit is the reward companies get for serving customers well and its pursuit is why companies take the risk with their existing money to gamble on innovations, many of which fail. Government regulators have a mission to protect consumers, but in nearly all cases, what they do instead is harm businesses, which raises costs, kills jobs, and slows innovation.

There is no positive to what the FTC or CMA or EU is doing here. The only winners to their actions are the bureaucrats who work for those agencies, gaining praise for the scalps they claim and the businesses protected by their regulations (primarily companies like Sony and Tencent).
Generally agreed. And especially with "Profit is not a bad thing."

Sometimes people can think more completely when I say "Try running a company without a profit." Or "Try working at a company without a profit."

Or "Try being a supplier to a company without a profit."

Or "Try being the community where the local businesses don't make a profit."

Etc. Etc.

It's become a trope, as you say. Not much thought through. Unless I'm missing something.

And if none of that makes sense to someone, I say "If you really, really believe the company makes excessive profit, then you should buy their stock."

But then some people gasp, which shows what? They don't want to appear to "support" the bad company or more likely, they don't have a clear idea how things work. The point being, excess profit bring in competition.

Still, this is a fine article. Thanks.
 
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Zachary Boddy

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Great article overall, and many, many solid points here. I completely agree with the poor reasoning by the regulators. However, I take issue with one piece toward the end, best summed up in the line: "Scrutinization is absolutely needed to prevent companies from exploiting their positions and harming consumers in the name of more profits..."

I don't think people who haven't run a business appreciate the massive destructive power of excessive government regulation. Profit is not a bad thing. While that's a common trope, it's one borne of ignorance. Profit is the reward companies get for serving customers well and its pursuit is why companies take the risk with their existing money to gamble on innovations, many of which fail. Government regulators have a mission to protect consumers, but in nearly all cases, what they do instead is harm businesses, which raises costs, kills jobs, and slows innovation.

There is no positive to what the FTC or CMA or EU is doing here. The only winners to their actions are the bureaucrats who work for those agencies, gaining praise for the scalps they claim and the businesses protected by their regulations (primarily companies like Sony and Tencent).
That's part of my point. The FTC, CMA, and other regulatory bodies are not doing what they're supposed to, which is to protect consumers. However, it should be noted that profit is only a sign of positive success when reinforced by a healthy, competitive market. Markets that are cornered and manipulated by major corporations in an effort to suppress and weaken competition can still drive record profits, but disproportionately into the coffers of only the largest players. This hurts consumers, as it gives us less choice. Regulatory bodies need to exist to monitor the interactions between companies and ensure that agreements to protect competition and drive innovation are upheld, but they should not arbitrarily force change or avoid change in the industry as is being done here.

It should be the job of governments to question, analyze the answers, and then put protections in place to ensure those answers and commitments remain truthful and to the benefit of the people, not just to the largest companies. These companies constantly attempt to curtail the authority of regulatory bodies through extensive lobbying, in an effort to reduce regulations and increase their freedom to operate how they desire, even if it means crushing healthy competition. Rampant, uncontrolled capitalism benefits no one but the top 1%.

Microsoft has made public, legally binding commitments to actively address the concerns of these regulatory bodies, but the decision to block the deal was still made by the CMA. I don't agree with that decision because of how it was reached, but I'm not going to agree that the CMA or similar regulatory bodies just shouldn't exist or completely stay out of the affairs of companies that frankly do not care about everyday people. Profits are not a bad thing, of course, but profits should only ever be a measure of a company's success in winning over consumers, not a result of a company dominating marketshare and mindshare in a specific industry.
 
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GraniteStateColin

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That's part of my point. The FTC, CMA, and other regulatory bodies are not doing what they're supposed to, which is to protect consumers. However, it should be noted that profit is only a sign of positive success when reinforced by a healthy, competitive market. Markets that are cornered and manipulated by major corporations in an effort to suppress and weaken competition can still drive record profits, but disproportionately into the coffers of only the largest players. This hurts consumers, as it gives us less choice. Regulatory bodies need to exist to monitor the interactions between companies and ensure that agreements to protect competition and drive innovation are upheld, but they should not arbitrarily force change or avoid change in the industry as is being done here.

It should be the job of governments to question, analyze the answers, and then put protections in place to ensure those answers and commitments remain truthful and to the benefit of the people, not just to the largest companies. These companies constantly attempt to curtail the authority of regulatory bodies through extensive lobbying, in an effort to reduce regulations and increase their freedom to operate how they desire, even if it means crushing healthy competition. Rampant, uncontrolled capitalism benefits no one but the top 1%.

Microsoft has made public, legally binding commitments to actively address the concerns of these regulatory bodies, but the decision to block the deal was still made by the CMA. I don't agree with that decision because of how it was reached, but I'm not going to agree that the CMA or similar regulatory bodies just shouldn't exist or completely stay out of the affairs of companies that frankly do not care about everyday people. Profits are not a bad thing, of course, but profits should only ever be a measure of a company's success in winning over consumers, not a result of a company dominating marketshare and mindshare in a specific industry.
I don't agree with all of that, but do with much of it. Thanks for the reply and interesting discussion. I agree on the role of government in an ideal situation where it is truly serving the people rather than ruled by political motivations. However, by that same logic, completely unfettered unregulated capitalism would also be great: each company ethically seeking to maximize returns purely based on attracting customers by offering a better product or service or pricing than their competitors.

As I suspect we'd agree, the problem with both is that many people (not all, probably not even most, but enough) will look for ways to game the system for personal gain at the expense of others, including their own organization. Given a choice, I'd trust businesses over government, simply because their incentive is at least related to customer satisfaction, where the incentives on bureaucrat behavior don't in any way attach to the people they supposedly serve.

But because neither is perfect, I do agree with you that some level of government oversight is needed. My preference would just have it be very small and limited, so that they are going after crimes and fraud, not gray area debatable subjects, like this one. It should not be UP TO THE GOVERNMENT in any normal scenario if one party can buy another, whether it's you selling me your computer or your chickens or Activision shareholders selling their stock to Microsoft. However, if there is a clear law that would be broken, say one prohibiting monopolies, then government should have the burden of proof that the sale or acquisition is going to result in an illegal state. If it can prove that, then it can prohibit the purchase.

The key distinction there is the burden to prove a problem, rather than the need to grant approval. It's the innocent-until-proven-guilty philosophy: always better than guilty unless you can prove you're innocent.

Or, to put it another way, if reasonable people can disagree on which is the right path because no clear law would be broken, then there's probably only very limited role for government getting involved at a regulatory level. That's exactly where the market should sort it out. Civil lawsuits between parties through the courts (obviously run by the government) are another matter and I have no issue with those.
 

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