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