Big Tech Notches Antitrust Wins Despite Aggressive Government Enforcement

The Department of Justice and Federal Trade Commission this month suffered another stinging court loss in a big tech antitrust case, raising questions about the effectiveness of the Biden administration’s aggressive enforcement of antitrust laws. Meanwhile, the decision gave corporate lawyers and dealmakers additional evidence that high-profile mergers can survive increased regulatory scrutiny.

The latest developments came as part of the FTC’s efforts to block Microsoft’s $68.7 billion acquisition of video game company Activision Blizzard. In light of an administrative challenge to the deal by the FTC, the DOJ and FTC had pursued a temporary restraining order and a separate preliminary injunction that would have stopped Microsoft from closing the deal while the FTC’s administrative process continued. Denying the injunction request, Judge Jacqueline Scott Corley of U.S. District Court for the Northern District of California wrote that the deal known as the “largest in tech history” deserves scrutiny, but that the “scrutiny has paid off” because Microsoft has committed to preventing rivals from being hurt.

Corley also warned that the FTC was unlikely to win its in-house challenge to the merger. Not surprisingly, the agency announced on July 20 that it was withdrawing its in-house administrative challenge, which was scheduled to go before an FTC administrative judge on August 2.

The government’s losses in the Microsoft-Activision deal signify another setback for FTC Chair Lina Khan and her enforcement-focused agenda. Earlier this year, a federal judge ruled against the FTC’s attempt to block Meta’s acquisition of virtual reality fitness app maker Within Unlimited. The FTC had argued the deal could stifle competition in a growing market.

Nevertheless, Khan has continued to bring similar cases against tech companies, most notably the agency’s expected challenge of Amazon’s business practices. Recent litigation against Google and Amazon fit with the Biden administration’s professed willingness to take antitrust matters to court in lieu of settlement agreements. Earlier this year the DOJ filed the second antitrust lawsuit against Google in less than three years, targeting the company’s advertising business.

The aggressive regulatory posture towards companies such as Google, Amazon, and Facebook are part of a broader plan to clamp down on big tech. The sector has become a target of populist wrath from both sides of the political aisle in the U.S., and for legal action in the European Union. The renewed interest in antitrust enforcement extends beyond tech companies, though. Bloomberg legal analyst Eleanor Tyler has portrayed the legal wrangling between the government and industry as, “a fundamental debate about government power, corporate power, and the role of markets in society.”

Despite the setbacks, U.S. and European regulators appear intent on continuing to take more aggressive stances on mega-mergers. But if recent rulings are any indication, companies will likely continue pushing back, unafraid to tackle future court battles.