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Microsoft wants to acquire the video game holding company valued at approximately $70 billion but the FTC is against the move for an anti-competition stance.
The Federal Trade Commission (FTC) filed for a temporary restraining order – in the United States District Court of Northern District of California, San Francisco Division – to seek a preliminary injunction for the acquisition of Activision Blizzard Inc (NASDAQ: ATVI) by tech giant Microsoft Corporation (NASDAQ: MSFT) for a whopping $70 billion. According to court documents filed on Monday, June 12, the FTC has been investigating the acquisition of the video game company on anti-competition matters. Moreover, the purchase of Activision Blizzard by Microsoft would make it the largest acquisition in the history of the video gaming industry.
FTC Doesn’t Approve the Move by Microsoft
Notably, the FTC initiated an administrative proceeding on December 8, 2022, to determine whether the proposed acquisition violates any of the anti-competition acts.
Similarly, the UK and Europe’s anti-competition agencies had issued similar warnings on the acquisition of the video gaming company by Microsoft. Moreover, Activision Blizzard publishes gaming products that are used by several consoles, PCs, and on mobile in a similar way that Microsoft does with the Xbox among other gaming products.
“On April 26, 2023, the United Kingdom Competition and Markets Authority (UK CMA ) issued a report finding that the Proposed Acquisition may be expected to result in a substantial lessening of competition in cloud gaming services in the United Kingdom,” the court filings noted.
According to Microsoft President Brad Smith, the move by the FTC and UK CMA is welcomed in order to accelerate the processes of finding Justice.
“We believe accelerating the legal process in the US will ultimately bring more choice and competition to the market,” Smith noted.
Microsoft and Activision Blizzard Market Outlook
Following the announcement, Microsoft shares closed Monday trading at $331.85, up 1.5 percent from the day’s opening price. The MSFT shares continued with the bullish outlook in the after-hours with about a 0.65 percent gain. The ATVI shares, on the other hand, traded sideways on Monday after closing the day trading at around $79.77 and hovered at the same level in the after-hours. YTD, Microsoft shares have gained 38 percent while ATVI has added approximately 4.21 percent.
The Biden administration has significantly ramped up its effort on the enforcement of antitrust laws. Back in 2021, Biden signed a punitive executive order encouraging government agencies to enforce antitrust laws. As a result, Microsoft may be compelled to continue with its video gaming projects without Activision Blizzard.
The growth of Web3-focused games has significantly pushed traditional gaming companies to move in a similar direction. Meanwhile, it is the cloud computing technology that is set to make a difference in the growth of the video gaming industry in the coming years.
Besides the complaint filed by the Center for AI and Digital Policy that may stir the probe of OpenAI, there is a number of other targeted efforts to stifle the development of AI systems across the board.
OpenAI, the fast-growing Artificial Intelligence (AI) startup behind the popular platform, ChatGPT may be welcoming a probe from the Federal Trade Commission (FTC) for the violation of section five of the FTC Act that targets deceptive and unfair practices. The probe might be triggered following a formal complaint filed by the Center for AI and Digital Policy.
“The FTC has a clear responsibility to investigate and prohibit unfair and deceptive trade practices,” the center’s founder and president, Marc Rotenberg, said in a statement. “We believe that the FTC should look closely at OpenAI and GPT-4.”
That ChatGPT has taken the center stage in AI discourse is not an exaggeration as the platform scored more than 100 million users within the first few months of its release. The recently launched GPT-4 is even more advanced, however, there have been complaints about the application giving false answers.
The basis of the complaints and Section Five that was violated posited that OpenAI employed deceptive tactics to market its product to consumers and sniff out the competition. This complaint may even get more defined attention from the regulator who updated its terms recently, calling on firms like OpenAI to desist from inflating their capabilities.
In addition, the FTC wants all the potential risks to be explored by the developers of AI programs.
“You need to know about the reasonably foreseeable risks and impact of your AI product before putting it on the market,” the agency wrote. “If something goes wrong—maybe it fails or yields biased results—you can’t just blame a third-party developer of the technology. And you can’t say you’re not responsible because that technology is a ‘black box’ you can’t understand or didn’t know how to test.”
OpenAI Probe amid Call to Halt AI Development
Besides the complaint filed by the Center for AI and Digital Policy that may stir the probe of OpenAI, there is a number of other targeted efforts to stifle the development of AI systems across the board. In a recent move, about 1000 tech leaders featuring Tesla CEO Elon Musk and Apple’s Co-Founder Steve Wozniack have called for the halt of AI solutions for at least 6 months.
“We call on all AI labs to immediately pause for at least 6 months the training of AI systems more powerful than GPT-4. This pause should be public and verifiable, and include all key actors,” the leaders said in their open letter. “If such a pause cannot be enacted quickly, governments should step in and institute a moratorium.”
Besides this, the United Nations Educational, Scientific and Cultural Organization (UNESCO) has also called for the formation of a Global Ethical Framework for Artificial Intelligence systems. With this growing clamor, the excitement surrounding ChatGP, and Google’s Bard may be tapered if regulatory scrutiny on these solutions is heightened.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
The hearing on Tuesday focused on Meta’s acquisition of Within, a VR company that makes a fitness app dubbed Supernatural.
Meta Platforms Inc (NASDAQ: META) shares closed Tuesday trading at $117.09, up 2.28 percent from the day’s opening price. The gains extended during the after-hours trading session with approximately 0.74 percent. Under the leadership of Mark Zuckerberg, Meta has been accused of buying its way up the virtual reality (VR) industry by the Federal Trade Commission (FTC).
In the past decade, Meta – formerly Facebook – had been developing its ecosystem to shape the future of technology. Moreover, Meta has made several acquisitions worth billions, which has ostensibly made the FTC think the social media giant is killing competitors.
“Instead of competing on the merits, Meta is trying to buy its way to the top,” said FTC Bureau of Competition Deputy Director John Newman in a statement about the lawsuit. “Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits.”
Mark Zuckerberg testifies that fitness in VR isn’t even his top VR app “use-case” priority. He reiterates social, gaming and productivity are priorities, and he says his email about the Peloton partnership was spurred b/c the VR biz was doing better in 2021 than forecasted.
— Dorothy Atkins (@doratki) December 20, 2022
The hearing on Tuesday focused on Meta’s acquisition of Within, a VR company that makes a fitness app dubbed Supernatural. During the hearing, Zuckerberg said that Meta focused on virtual reality (VR) fitness apps in 2021 due to its excess capital. However, the company’s stand has since changed as revenues hit a nosedive in 2022.
Furthermore, the privacy implementation by Apple Inc (NASDAQ: AAPL) has significantly reduced the revenues of most social media platforms that are heavily dependent on online advertisements.
Meta Shares and the Market Outlook
According to market data from MarketWatch, Meta shares have lost approximately 65 percent in 2022, thus retesting the lows of 2016. While most of the FAANG stocks have recorded poor performance in 2022, market strategists are positive they will be profitable in the coming years. Moreover, the global economy is heavily reliant on emerging technologies including artificial intelligence (AI) and blockchain development.
As such, Meta remains under regulatory scrutiny due to its competitive prospects and ability to kill other smaller businesses. According to aggregate data from MarketWatch, Meta has a market capitalization of approximately $303.55 billion and 2.25 billion shares outstanding.
Meta has received significant criticism for its market dominance both domestically and internationally markets. During Tuesday’s hearing, the Federal Trade Commission lawyers attempted to show that Meta had planned to compete with apps like Within, arguing that executives identified fitness as a way to expand VR use beyond its existing fan base of young male gamers.
While the FTC continues to pressure Meta to stop the Within acquisition, the commission also wants to unwind two previous acquisitions, Instagram and WhatsApp, in a lawsuit filed in 2020.
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