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Tech Regulation

The EU’s ‘regulate first, innovate later’ mantra will sink U.S. tech firms

Last week, a bespeckled white-haired Frenchman strolled the streets of San Francisco in between high-profile meetings and uncomfortable photo ops.

With his horn-rimmed round glasses, wavy hair, and tailored suit, as well as a full entourage of slickly-dressed Europeans, the European Union Commissioner for the Internal Market, Thierry Breton, made his rounds in Silicon Valley.

Breton’s powerful role within the EU’s executive body is to oversee trade in Europe’s single market system, comprising nearly 500 million consumers and citizens. It makes him tremendously powerful. What other European politician could secure meetings with Elon Musk, Mark Zuckerberg, and Sam Altman in just one day?

While the mandate for Breton’s role is rather large — everything from broadband to online platforms, and climate change — his goal in San Francisco was to meet with US tech titans and CEOs to prepare them for the imminent enforcement of the Digital Services Act (DSA), an all-encompassing EU law intended to create a “safer digital space” for Europeans.

The law will come into force at the end of August and lay dozens of new obligations on internet companies that wish to serve users in the European bloc.

The DSA could best be described as Europe’s regulatory model for Big Tech and the Internet. The only problem? Only a sliver of the companies the Digital Services Act targets for restrictions or regulations are even based in the EU.

Out of the 17 companies designated “Very Large Online Platforms” by the law — meaning they will be held to the highest burden of regulation and rules — only one is based somewhere in Europe: Zalando, an online fashion retailer.

The rest are from…you guessed it…the United States. This includes firms such as Meta, Twitter, Google, Snapchat, and Amazon, but also Chinese firms such as TikTok and Alibaba.

The DSA enforces a litany of expansive restrictions and rules that go far beyond any US regulation: severe limits on targeted advertising, more diligent content moderation to remove what the EU deems “illegal” content, protocols for weeding out “disinformation”, and more.

Considering how much Big Tech has been forced to censor users to appease regulators in the free speech haven of the US, it will only get worse overseas.

While the principal aims of the DSA are well-intended — safeguarding consumer privacy and protecting minors — how these provisions are enforced or interpreted should concern all of us who believe in an open web.

To begin, there is platform liability attached to both disinformation and illegal content. In the US, we have Section 230, which exempts platforms from being liable for users’ posts. In Europe, every major online platform would be forced to instantly police its users or face severe penalties while still being weighed down by impossible questions.

Do platforms decide what is disinformation or will governments provide examples? What if a government gets it wrong, like in the early days of COVID? Or has more malicious intent like in unfree surveillance societies?

With no First Amendment-like protections for speech on the European continent, we know the censorious demands of European officials will soon swallow entire budgets of tech firms in order to comply, money that would otherwise be used to deliver value for users. Will it all be worth it?

We know that each platform has the ability to moderate or censor as they see fit, but this is usually done by internal policies and codes that users voluntarily accept, not reaction to a policeman holding the regulatory baton. Rather than focusing on restricting and limiting American tech firms, the Europeans should be doing everything possible to change their own rules in order to foster the innovation that Silicon Valley has been able to provide for decades.

The mindset promulgated from Brussels is “regulate first, innovate later,” in hopes that the talent and ideas will spring from a stable, regulated environment. If that were the case, we’d have dozens of European tech unicorns vying for global dominance. Instead, there are barely any. Or they’ve been bought up by an American company.

Europe has chosen to forgo becoming the world’s test market for innovative products and services, opting instead to be the ultimate playground of bureaucratic and legal restrictions. While some American politicians and regulators may look over with a gleeful eye, it is clear that consumers and creators are getting left behind on the Old Continent, and American users will soon be in the crosshairs.

Originally published here

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 battlesof 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.

Originally published here

Technological neutrality is the best mechanism of cyber security and protects consumer data privacy

KUALA LUMPUR, 26 th June 2023 – The Consumer Choice Center (CCC) emphasizes the
importance of governments supporting and maintaining technological neutrality in putting in
place the best mechanisms for cybersecurity systems and consumer data protection.

Representative of the Malaysian Consumer Choice Center, Tarmizi Anuwar said: “Technology
changes very quickly and faster than amendments or changes in laws. In this regard, laws that
are friendly to innovation and technology or so-called neutral technology need to be prepared so
that healthy competition between private companies becomes the best method of determining
the mechanism in data privacy regulations.”

In addition, Tarmizi commented on the recommendation of the Minister of Communications and
Digital that the private sector makes investments related to aspects of cyber security and data
privacy according to the appropriateness of their respective operational levels which is
considered positive. However, it is necessary to remain consistent and not put an excessive
burden on the private sector.

“The recommendation can be considered good because the enforcement of interoperability
standards can be prepared and implemented by the firm that handles the data, and is not
necessarily determined by law. This will also give space to start-up companies to operate at a
cost that matches their capabilities.”

“Basically, every company has its own interest in protecting the cyber security or privacy data of
their consumers. Excessive legal stipulations such as imposing specific software will cause an
increase in business costs and subsequently increase prices for consumers”, he said.

Explaining Malaysia’s efforts to collaborate with Southeast Asian countries in creating a data
sharing protocol to become a regional data processing hub, he said the government must make
the concept of industry-based data portability as the main standard.

“In order to become a regional data processing hub, the government needs to use industry
standards as the main policy and strategy. This standard is a faster and more efficient way and
is able to coordinate the differences in laws in each country to enforce and regulate portability
over the law.” he concluded.

If Brendan Carr is reconfirmed to the FCC, how will consumers fare?

CCC Managing Director, Fred Roder (left), FCC’s Brendan Carr (middle), CCC Deputy Director Yaël Ossowski (right)

On Monday, President Joe Biden re-nominated Brendan Carr to the Federal Communications Commission. For consumer advocates like us at the Consumer Choice Center who work on many issues related to tech innovation and the protection of our rights online, that’s welcome news.

Now, the US Senate must confirm Carr’s nomination. It would be a welcome opportunity to continue efforts and opportunities to both support and defend consumer choice.

Throughout his tenure at the chief telecom regulator, Carr has chiseled out his space as a principled voice and worthy fighter for many consumers issues.

His dedication to the expansion of rural broadband access, smart investment in telecom and Internet infrastructure, and common-sense rules to help facilitate American ingenuity and entrepreneurship stand out as some major achievements.

Whether it was the repeal of Title II classification for Internet Service Providers (net neutrality), the protection of free speech, or his desire to address the influence of the Chinese Communist Party through TikTok and other platforms, Carr has never missed an opportunity to an evidenced-based approach vital to policymaking.

We hope to continue working with Commissioner Carr in his new tenure despite some disagreements on the nuances of specific policies because we believe he is earnest, sincere, and willing to hear arguments and policy cases from all sides of the aisle. There will be many opportunities to ensure policies are in the interest of consumers.

Issues such as online free speech, upholding Section 230, and how best to avoid government interference in content moderation will prove to be pivotal issues in the next term, and it will be of great benefit to a wide spectrum of American consumers to have someone like Brendan Carr at the helm.

If US Senators confirm Carr for another tenure, we look forward to working together for smart policies to benefit consumers around the country.

Here is a clip of our conversation with FCC Commissioner Carr on Consumer Choice Radio:

FTC Chair Lina Khan’s social media crusade is now just an expensive, taxing grudge against consumers who want cool tech

Red X on all your apps (generated by Midjourney AI)

WASHINGTON, D.C. – Extending its crusade against select social media firms, the Federal Trade Commission proposed several scathing amendments to a 2020-era privacy order with Meta on Wednesday, hoping to issue a blanket ban on “monetizing” youth data, a halt on all new innovations or product upgrades, and key criteria on privacy provisions.

The FTC has already attempted to halt several high-profile acquisitions by tech firms since Lina Khan’s ascension to FTC chair, including Microsoft’s purchase of video game company Activision, and Meta’s acquisition of the VR fitness app Within.

Yaël Ossowski, deputy director of the consumer advocacy group Consumer Choice Center, responds:

“These retaliatory actions prove the FTC is now subsumed by a hyperactive crusade against all mergers and acquisitions – and effectively consumer choice, especially when it comes to new technologies. This has a chilling effect on any and all new innovators and remains incredibly paternalistic to tech-native consumers who want robust competition.

“Business models come and go, and consumers should be the ones rewarding or punishing firms and services they want or don’t want to use, not the federal agencies temporarily in charge of competition policy,” added Ossowski.

The accusations by the competition agency that Meta has failed with respect to privacy also seem a bridge too far, especially considering the convoluted patchwork of state privacy laws and federal agency mandates that exist in lieu of a comprehensive federal law to safeguard consumer privacy.

“As consumer advocates, we regard privacy and data security as the most fundamental elements of a consumer’s online experience. But while there are true bad actors that exist and are actively committing offenses right now, the FTC is dead-set on pursuing an ideological agenda against a handful of American tech innovators, all the while excusing or remaining blind to the real privacy violations committed by foreign apps that have much larger reach and sway among young people.

“The FTC’s social media crusade is now just an expensive, taxing grudge against consumers who want cool tech. Consumers would prefer the agency punish bad actors and bad behavior rather than corner American tech companies into a labyrinth of compliance no one could ever reasonably pass.

“We as consumers deserve a vibrant online marketplace where the winners are chosen by us instead of whichever political faction happens to control a federal agency,” concluded Ossowski.

##

The Consumer Choice Center is an independent, non-partisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life.

We champion smart policies that are fit for growth, promote lifestyle choice, and embrace tech innovation for tens of thousands of our members and society-at-large, using research and educational outreach to policymakers and the broader public. Learn more at consumerchoicecenter.org.

L’INCOHÉRENCE DES SUBVENTIONS EN EUROPE

Nous devons revenir aux principes fondateurs du marché commun.

Selon une tendance que j’ai décrite à plusieurs reprises dans La Chronique Agora, les pays européens s’orientent de plus en plus vers des modèles de subventionnement de l’industrie, dans le but de s’aligner sur les très vastes projets des États-Unis visant à soutenir les transitions économiques respectueuses du climat. Cela a créé une situation dans laquelle l’Union européenne punit les États qui soutiennent leur industrie nationale, mais les incite également à le faire.

Prenons un exemple dans lequel la Commission européenne applique strictement les règles anti-subventions de l’Union.

La Commission européenne vient de décider, à juste titre, que les aides d’État accordées par l’Italie à la compagnie aérienne en difficulté Alitalia (qui a depuis fait faillite et s’est rebaptisée « ITA Airways ») n’étaient pas conformes aux règles de l’UE. Rome a accordé à la compagnie aérienne un total de 1,3 milliard d’euros de prêts en 2017 et 2019 – selon Bruxelles – sans indication palpable que la compagnie serait en mesure de rembourser les prêts ; 400 millions d’euros de ce prêt doivent maintenant être remboursés aux contribuables italiens, a statué la Commission. Cependant, ITA Airways affirme qu’elle n’est pas responsable de la dette accumulée par Alitalia, ce qui signifie que Rome ne sera probablement pas en mesure de se conformer à la décision.

« La solution à long terme ne réside pas dans les subventions publiques », explique Ebba Bush, vice-premier ministre et ministre des Affaires suédoise, interrogée sur les projets de l’UE visant à augmenter considérablement les subventions pour contrer la « loi sur la réduction de l’inflation » américaine (IRA). Certaines des plus grandes économies européennes, telles que la France et l’Allemagne, ont fait pression en faveur d’un assouplissement des règles de l’Union en matière d’aides d’État afin de rester compétitives au niveau mondial dans les secteurs verts. Des pays plus petits, dont la Suède, qui assure la présidence tournante du Conseil, ont toutefois averti que le marché intérieur pourrait être menacé si Bruxelles permettait de donner trop d’argent aux plus grandes économies de l’Union.

L’assouplissement des règles relatives aux aides d’État a été motivé par la forte augmentation des prix de l’énergie et le risque de voir l’industrie européenne se déplacer vers les États-Unis en réponse à l’IRA, qui est entré en vigueur en août 2022 et offre des subventions d’une valeur de 369 milliards de dollars pour les « investissements verts », à la suite de quoi les entreprises envisagent de se délocaliser vers les États-Unis.

Margrethe Vestager, vice-commissaire de l’UE, affirme qu’il est essentiel de préserver l’intégrité du marché unique de l’UE. « Quoi que nous fassions, nous devons éviter une course aux subventions », a-t-elle ajouté. La Commission propose de simplifier le calcul des aides d’État, d’accélérer les approbations et d’élargir le champ d’application de l’encadrement temporaire de crise et de transition – adopté à la suite de l’invasion de l’Ukraine par la Russie – afin de « soutenir toutes les sources d’énergie renouvelables possibles ».

Cet encadrement propose également une « option temporaire très exceptionnelle d’aide d’alignement ». Le projet suggère que les États membres soient autorisés à égaler les subventions offertes par les pays tiers, afin de garantir que les investissements ne soient pas « injustement détournés vers le plus offrant en dehors de l’Europe ». Les dispositions ne s’appliquent qu’aux secteurs affectés par l’IRA, et des conditions strictes seraient imposées, notamment si le projet profite à plus d’un État membre, a indiqué Mme Vestager.

Même en prétendant qu’il y aura des contrôles stricts sur l’utilisation des aides d’État, la Commission européenne a des antécédents plutôt occasionnels en ce qui concerne l’application de règles strictes (Alitalia est l’une d’entre elles). En général, Bruxelles énumère toutes sortes de raisons exceptionnelles pour lesquelles un paquet particulier d’un milliard d’euros a été approuvé et, dans le cas de COVID-19, a emprunté des sommes incroyables sur le dos des contribuables de l’UE.

En théorie, l’Union européenne s’efforce de créer un marché exempt de distorsions anticoncurrentielles, mais en réalité, elle ne fait pas grand-chose pour y parvenir. L’IRA américain a touché un point sensible : non seulement l’Europe peut revenir au protectionnisme, mais elle peut aussi le faire en prétendant le faire au nom du développement durable. Après tout, nous diront les bureaucrates, quel meilleur scénario qu’une guerre commerciale qui protège l’environnement ?

Voici les principaux problèmes liés à l’ouverture des portes de l’État dans l’UE :

  • bien que plafonnée à 150 millions d’euros par entreprise, l’aide ne tient pas compte de la taille et des concurrents européens, ce qui signifie qu’elle bénéficiera de manière disproportionnée aux grandes entreprises par rapport aux PME ;
  • les pays les plus pauvres de l’UE – même s’ils sont autorisés – ne sont tout simplement pas en mesure d’accorder autant d’aides d’État qu’un pays comme l’Allemagne, ce qui crée de nouveaux déséquilibres sur le marché ;
  • les grandes entreprises sont également en mesure d’augmenter leurs subventions sur plusieurs continents, car l’UE autorise le dépassement du plafond s’il existe un risque palpable de voir les investissements quitter le marché unique.

Nous devons revenir aux principes fondateurs du marché commun : le libre-échange, l’absence de distorsions du marché dues à des normes réglementaires injustes pour les produits et les services, et l’absence de subventions. Nous ne pouvons tout simplement pas nous le permettre, tant sur le plan financier qu’économique.

Originally published here

americans for tax reform

Online Security Concerns Shouldn’t Enable a Surveillance State

At the 2012 London Olympics, Sir Tim Berners-Lee, creator of the World Wide Web, crafted the message “This Is For Everyone.” And at that time digitized opportunities felt limitless. Now, a little more than a decade later, that message might read “This is for Everyone – Pending Oversight and Approval.”

Indeed, tech accountability proposals and high profile hearings with Silicon’s finest were plentiful last year and this year shows no signs of slowing down. Governmental officials of both parties have proven to have a never-ending interest in meddling in online anonymity, as the recently proposed RESTRICT Act shows.

RESTRICT stands for Restricting the Emergence of Security Threats that Risk Information and Communication Technology – the name says it all. 

Essentially, this act grants the Department of Commerce the authority to interfere with any data of any user and prosecute any activity based on any possibility of a threat – and any disapproval for interference derived from Congress can only be brought forth after the fact. If this sounds out of proportion, read it for yourself.

While other proposed bills, such as Section 230, have (wrongly) placed service providers and social media networks as the target for regulation, the RESTRICT Act applies to everyone.

Under the RESTRICT Act, all internet-based interactions and transactions would be subject to surveillance and scrutiny, which is why some have dubbed the RESTRICT Act to be ‘the Patriot Act 2.0.’ Such an assertion, however, is too kind, since the ‘sneak and peek’ approaches that were allowed under the Patriot Act pale in comparison to the constant oversight of online affairs that the RESTRICT Act would enable.

It is also worth noting that the Patriot Act was set to expire in 2005 but, like many government programs, it has been preserved and currently lives on under the USA Freedom Act of 2015. And although the USA Freedom Act had a planned expiration date set for 2020, it is also still hanging on.

It seems unlikely the RESTRICT Act will gain any real traction given its extreme nature, but proposals like these act as prototypes or concept tests for what might come next – and stranger things have happened.

It was just a little over a year ago, for example, when the Biden Administration launched the Disinformation Governance Board, aka the ‘Ministry of Truth.’ Nina Jankowicz, the appointed ‘disinformation czar,’ went viral on TikTok with a revamped (and ridiculed) rendition of ‘Supercalifragilisticexpialidocious,’ and backlash quickly ensued as the board was evidently too Orwellian for the American public to stomach. 

The states are getting in on the act too. Take for example the Arkansas legislature’s recent passing of an “online youth safety” bill, which itself mirrors a law which Utah passed last month. 

Arkansas’s Social Media Safety Act, signed by Gov. Sanders, requires all online users to prove whether they are age-appropriate for certain platforms and content, which thereby necessitates the collection of biometric and personal data for ID verification. 

Any online anonymity or semblance of data privacy has been revoked by the state in the name of safeguarding children. Yaël Ossowski, deputy director of the consumer advocacy group Consumer Choice Center, rightly asserts that the government is now poised to be “the final arbiter of whether young people access the Internet at all.” 

Parental ability (and responsibility) to play a part in the digital lives of their children is being delegated to government bureaucrats, and it won’t be long until other state legislatures follow suit. Connecticut looks to be next.

What is truly disturbing about these laws is that they enable government overreach in places that the market has already been providing solutions for online child safety. Concerns over data management and data access have resulted in cyber security’s being one of the fastest growing markets, with lucrative positions for those studying to be information analysts and data scientists. 

As it so happens, none other than Sir Tim Berners-Lee has launched a decentralization project to tackle data rights management. His is one of many initiatives that should be incentivised by user interests and left unencumbered by political interference. 

Historical and empirical evidence proves that a decentralized economy leads to progress and prosperity, so we should enable our digital economy with the same approach. 

Originally published here

CCC’s comment on the European Union’s Consultation on the Future of Electronic Communications Sector and Its Infrastructure

On April 26, 2023, the Consumer Choice Center submitted comments to the European Commission’s exploratory consultation on the future of the electronic communications sector. This includes comments and thoughts on the proposed “Fair Share” proposal circulated by some EU Member States.

The comments can be read here in full here.

Arkansas Youth Deserve Better Than Gatekeeping of Social Apps

Dear State Representatives and Senators,

As a consumer advocacy group engaged on digital issues, privacy, and defending technological innovation, representing both our members and consumers, we implore you to consider another path when it comes to protecting Arkansas youth online, specifically SB396, which Gov. Sanders signed into law this month after passing both of your respective chambers.

In its current form, once it comes into force in September, the law would be the most draconian age-verification process for online platforms in the nation, requiring all users under 18 who want to use specific social media platforms to provide exhaustive proof of their age and to seek parental consent. 

It would also require select social media apps to collect sensitive pesonal information that we do not believe should not ever be in the possession of any private entities by government mandate. This is ripe for future abuse or data security issues that could have real harm for young people beginning their life online. It will be a pandora’s box of epic proportion.

What’s more, the law makes line-item exceptions to popular social apps like YouTube, Truth Social, and others, which have all the same features as other apps, demonstrating the unequal regulatory position sought by the State of Arkansas, choosing winners and loses, which we would not tolerate in any other industry. 

A solution respecting parental rights, defending American innovation, and allowing online consumers and their parents to choose their apps would not only be more adequate, but would allow the best private sector solutions to emerge, rather than by state decree.

Parents should not have their own authority and decision-making usurped by state law or institutions, no matter how noble the cause. Rather than risk gatekeeping an entire generation from enjoying social connections online, we implore you to provide another solution that works for parents, young online consumers, and the American tech innovators who provide value for each and every one of us in our own lives.

In a free country with a vibrant competitive marketplace, we will not have a competitive global edge if an entire generation is kept from the keyboard and online global village.

FTC Blocking Microsoft-Activision Will Worsen Consumers’ Gaming

In many households, the word “PlayStation” has become synonymous with gaming in the same way that we now “Google” things or “call an Uber.”

The same with kiwis.

Did you know they are actually a trademark, and the fruit is actually called Chinese gooseberries?

When brand names overtake the initial descriptions of their product, it usually means that they have a majority share in the market.

Sony’s PlayStation is no exception: with a whopping 68% of the international console market, the Japanese company has had a stronghold for decades.

Microsoft is attempting to diversify the market with its Xbox console by acquiring video game publisher Activision, but the Federal Trade Commission (FTC) has stopped it in its tracks.

This purchase would allow Microsoft to better compete with Sony while giving consumers more choice between devices, including console and PC, which is important since PC gaming plays a significant part in the gaming market.

The FTC claims that the acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” Its most principal concern is that it will make “Call of Duty”and other popular games Xbox exclusives.

We already know this isn’t true. Microsoft has already made a dealwith Nintendo and provided an offer to Sony to keep Call of Duty on their platforms.

Exclusive content is everywhere.

Streaming platforms have objectively become the kings of exclusivity, fencing in original content to gain subscribers.

Listening to Joe Rogan’s podcast can only be done on Spotify, while publishers often get paid by console companies like Sony to keep their products off other platforms.

Sometimes, exclusivity sells; sometimes it doesn’t.

When exclusivity becomes frustrating to consumers, they often abandon the products or services in question altogether.

The UK’s competition watchdog already determined that Microsoft-Activision falls within the latter camp. Stating that exclusivity would be loss-making for Microsoft, it wrote that, “The updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation.”

The deals Microsoft has made with other consoles prove it, yet the FTC still refuses to concede this point and back off its hold.

As an analyst at a consumer group dedicated to promoting and protecting competition, this concerns me for a number of reasons. It’s emblematic of regulators and policymakers’ overuse of antitrust law in this new digital age.

Whether it’s suggesting that Amazon.com should not be able to bundle service in its Prime subscription or that Apple shouldn’t be allowed to pre-install FaceTime on its phones, Washington’s use of a big stick to sideswipe competition hurts the marketplace in a number of ways.

It restricts innovation by reducing the options of products and services firms could offer, it allows the government to decide winners and losers in lieu of consumers, and it raises prices through reduced competition and compliance costs.

Free competition enables consumers to decide on the better product with their pocketbooks. As long as market entry rules are fair, regulatory barriers low, and an industry doesn’t benefit from unjust subsidization; the FTC has no reason to intervene.

Originally published here

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