Last week, Microsoft announced this that the company was Acquisition of Activision Blizzard, the gaming giant responsible for mega hits like Overwatch, Diablo, Call of Duty, World of Warcraft and Candy Crush.
The nearly $70 billion acquisition of the recently troubled gaming studio speaks to the growing trend of large tech companies buying and merging with smaller companies to consolidate power in the tech industry. This unilateral concentration of power hurts consumers and smaller competitors in the industry. While many high-profile members of the Biden administration have called for more regulation of technology to curb anti-trust and anti-competitive practices, the concentration we’re seeing in the industry also poses a privacy concern.
Microsoft already owns the popular Xbox console platform and profitable gaming franchises like Halo, Forza, Age of Empires and Minecraft. The deal with Activision Blizzard will likely be even more impactful, as this is actually the second major game studio Microsoft has bought in less than a year. Microsoft only announced this last March Acquisition of ZeniMax, the parent company of popular gaming studio Bethesda Softworks, in a $7 billion deal. Bethesda is the creator of gaming franchises including Fallout, Doom, and Wolfenstein.
It’s clear that Microsoft wants to take over a large chunk of the gaming market. Investors certainly thought so, as console games competitor Sony experienced one huge drop in stock prices right after Microsoft’s announcement. With the acquisition of Activision Blizzard, Microsoft is expanding into new territories, including mobile gaming and potentially virtual and augmented reality. Announcement by Microsoft written down that this acquisition would “provide building blocks for the metaverse”.
Coincidentally, on the same day, Federal Trade Commission Chair Lina Khan and Assistant Attorney General Jason Kanter announced a plan to “modernize” merger policies — policies that could limit or even block the very kind of deal Microsoft just announced. When FTC and Department of Justice regulators review the Activision Blizzard acquisition, they should consider not only the competitive impact on the marketplace, but also consumer protection and competition issues related to privacy. Because Microsoft is not only gaining market share, intellectual property and employees, but is also trying to bring more consumer data into the process.
It’s clear that Microsoft wants to take over a large chunk of the gaming market.
By expanding gaming to consoles, PC, cloud, mobile and even the Metaverse, Microsoft is opening up new ways to attract consumers and collect and leverage consumer data. Different types of data are collected from different gaming platforms. For example, Mobile gaming apps may collect data related to phone usage behavior, including location tracking. If Microsoft plans to expand its Metaverse-related virtual and augmented reality game offerings, it means a lot more Collection of biometric data possibly well beyond what was collected with the discontinued Xbox Kinect console.
The Activision Blizzard deal will also mean a lot more user data for Microsoft (and it already has access to quite a lot). That should concern us all. The privacy risks associated with data collection are exacerbated when an organization is able to collect massive amounts of data from multiple sources about the same individual. It becomes easier for this data to fall into the wrong hands or lead to misuse or re-identification of private data.
Data protection and antitrust law are intertwined. The bigger and more powerful a tech company gets, the more it can collect and use data from private individuals. The more data a company has, the harder it is for other companies to compete. For example, if a company has access to billions of data points about user behavior and preferences, it is likely in a better position to meet consumer demand than a smaller company that lacks those resources. This slows innovation and risks greater privacy damage for consumers.
Companies with a larger market share are also often better equipped to shape the legal and regulatory conversations, which has helped big tech companies avoid privacy regulations for quite some time.
The deal between Microsoft and Activision Blizzard speaks to the great profit potential in the gaming industry. But there is also cause for concern. Even if this deal goes through, it’s another example of tech companies buying up smaller companies to concentrate market power. Biden’s antitrust-savvy appointments are unlikely to ignore this trend, meaning more regulation is likely on the horizon.
As consumers, we deserve a market that offers innovation and opportunity. As individuals, we deserve digital rights like privacy. And as gamers, we deserve to be able to fight for the Horde without worrying about what Microsoft is doing with our data.