In December, Federal Trade Commission Chair Lina Khan told the WSJ CEO Council, “competition is critical to have an economy that’s thriving, to ensuring that we have robust innovation.” That’s idle chatter. Actions speak louder than words. Look at her agency’s innovation-killing actions: “FTC seeks to block” Meta’s acquisition of virtual reality app Within. Or Microsoft’s acquisition of videogame maker Activision. Ms. Khan is playing checkers while others are playing chess.
In the early 1990s I raised money for Activision at a $100 million valuation. Last January, Microsoft offered $69 billion for the company—we’ve come a long way. Gaming companies used to sell cartridges for videogame consoles like Nintendo and Sega or floppy disks for personal computers. Over time this changed to CD-ROMs for new consoles like Sony’s PlayStation and Microsoft’s Xbox. Then came handhelds. And now mobile phones. The FTC, seemingly prodded by Sony, is worried that Microsoft will “harm competition in high-performance gaming consoles.”
That’s laughable. It’s like protecting floppy disks. While Microsoft has promised to make some games available on competing consoles, including Sony’s PlayStation for the next 10 years, I doubt anyone will be selling new consoles a decade from now as everything moves to the cloud. Why? Because while 75% of today’s televisions are Smart TVs, soon TVs will have graphics engines as powerful as today’s videogame consoles. Then it’s game over.
As usual, the FTC is still fighting the last war. The next war is over online worlds, the so-called metaverse. This makes even more bizarre the FTC’s attempt, which was recently denied by a district court judge, to block Meta from buying fitness app maker Within. As if Jazzercise or “Sweatin’ to the Oldies” is innovation. The metaverse already exists and videogames are, pun intended, its killer app so far.
Don’t care about videogames? OK, but the future of commerce and education will live in online worlds. Microsoft will bring Azure’s cloud expertise, HoloLens’ headset, and even ChatGPT’s conversational artificial intelligence to Activision’s 3-D worlds. Chatbot avatars might replace salesmen and teachers one day.
Microsoft would make a formidable competitor to Meta. So would Apple…
