A global antitrust alliance battles Microsoft and Amgen

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For connoisseurs of takeovers and the battles surrounding them, this has been an exciting week. When the EU approved Microsoft’s $75 billion bid to buy Activision Blizzard, the US Federal Trade Commission sued to block Amgen’s $28.3 billion deal to the acquisition of Horizon Therapeutics and warned of “rampant consolidation” in the pharmaceutical sector.

Margrethe Vestager, European Commissioner for Competition, is known as the nemesis of Big Tech but others are taking her place. The Amgen lawsuit epitomizes the tough approach taken by FTC chair Lina Khan, and Khan has a new ally: Sarah Cardellmanaging director of the UK Competition and Markets Authority.

Both Cardell and Khan are trying to block the Microsoft-Activision deal, and the CMA has particularly pissed off Activision chief executive Bobby Kotick. “It won’t be Silicon Valley, it will be Death Valley,” he warned of the UK’s post-Brexit tech ambitions, going on to this week vowing to expand into Europe.

This is the kind of bravado Big Tech used to unleash on the EU, but this time Vestager has won the favor. He agreed to the deal after Microsoft pledged to license Activision’s titles, including its blockbuster call of Dutyto rival cloud gaming services for 10 years.

But EU approval is limited comfort for companies like Amazon, Google, Meta and Microsoft: the emerging Anglo-American approach to competition enforcement is a gritty alternative. Indeed, the UK wields a significant amount of power here, compared to other post-Brexit struggles: global technology is so integrated that a CMA veto will often be enough to stymie deals.

The UK and the US are pushing monopolies more strongly in two ways. One is that they’re less willing to accept behavioral remedies like Activision’s commitment to Microsoft as a solution. Instead of being dragged into what khan calls a “whack the mole approach” of constantly having to ensure that companies deliver on commitments, they want to keep competition open.

Second, they are pushing the boundaries of merger control, particularly in technology, preventing already powerful companies from entering new and growing markets with acquisitions and curbing competition before it starts. As Mark Zuckerberg once remarked about Facebook acquisitions of Instagram and WhatsApp, “it is better to buy than to compete”.

In the Microsoft-Activision case, the CMA dismissed the EU-accepted Microsoft remedy as inadequate. He then blocked the deal not because of their existing strength in video games on the Xbox console, but because it would allow the merged company too much leverage over the fledgling cloud gaming business. Microsoft protested in vain that it was “highly speculative”.

THE FTC lawsuit against Amgen-Horizon it’s also a break from the past. Amgen wants to acquire Horizon to get two blockbuster drugs that currently face little competition. This type of deal has become commonplace in U.S. pharmaceuticals, but the FTC says this would allow Amgen to extend drug monopolies by bundling them with its own discounts for drug buyers.

I approve of regulators being inventive in limiting the accumulation of excessive power by large corporations. Both the tech and pharmaceutical industries are now structured like this: small, innovative startups build new products in the hopes of being bought up by large platforms. It works out for both sides financially, but it strengthens the Monoliths.

Nor should governments simply bow to the wrath of powerful corporations. Jeremy Hunt, the UK chancellor, is clearly concerned about the idea of ​​tech companies boycotting Britain. “I think it’s important that all of our regulators understand their broader responsibilities for economic growth,” he said this week. But also regulators need to regulate.

Cardell and Khan don’t operate in a vacuum. The push to limit the power of platforms is also a political priority. This is the purpose of the EU’s new Digital Markets Act and why the US administration has appointed both Khan and Jonathan Kanterhead of the antitrust division of the US Department of Justice.

My only proviso is that innovation in merger regulation must be solidly founded and open to recourse. This is how it works in the US, where the FTC has to justify itself in court. Khan fails sometimes: In February, a federal judge allowed Meta to buy Within, a virtual reality start-up, after the FTC filed a petition to block the deal.

It is less clear in the UK, where an appellate tribunal rules only on whether the CMA (and the panel making the decision) acted rationally and lawfully in a merger case, rather than on its full merits. It will be difficult for Microsoft and Activision to win the appeal, putting Cardell in a very powerful global position. Britain may want to rethink this deal.

That said, companies are used to spreading their power and regulators need to respond. “The evolution of new markets is just what we missed in the past,” says Tommaso Valletti, former chief competition economist at the European Commission. Two cheers for Cardell and Khan.

john.gapper@ft.com