Microsoft’s Activision Deal Tests a New Global Alignment on Antitrust

Until recently, the European Commission was often seen as the toughest antitrust regulator, taking a more expansive view of what could harm competition. On the other end of the spectrum was the United States, where decades of precedent leaned toward a more limited view of the kinds of deals that should be blocked. And so deal makers believed that if they could appease the European Union with a behavioral remedy, their transaction was likely to survive global scrutiny.

That has changed. Britain’s Competition and Markets Authority, which was established in 2014, has positioned itself as pushing for tougher powers after Brexit, presenting itself as a check on Big Tech and other corporate giants. In the United States, President Biden has appointed antitrust officials — Lina Khan of the F.T.C. and Jonathan Kanter of the Justice Department’s antitrust division — who have expansive takes on regulating competition. Khan, in particular, has championed cracking down on mergers and Big Tech, and she has said she is willing to take on tough-to-win cases to help stretch the boundaries of antitrust law.

Cracking down on consolidation, especially in Big Tech, is politically popular on both the right and left, and antitrust cases are getting more attention from the public.

One former enforcement official, who asked not to be named because his employer had not authorized him to comment, put it this way to DealBook: Regulators would rather fight to block a deal and lose than accept a compromise, because the political cost of agreement is too steep.

The F.T.C. opposed Microsoft’s bid to acquire Activision in a lawsuit filed in December. Microsoft’s legal team also expects the antitrust authority in Britain to oppose the transaction, while it believes the European Commission is open to potential remedies, according to four people briefed on the matter who were not authorized to speak publicly.

Some of these people said that Microsoft was hoping to convince both Britain and the European Union to accept its concessions and approve the deal, which could make it easier for the company to reach an agreement with the F.T.C. before the scheduled administrative trial starts in the summer. If all of the agencies accept the compromise, the (perhaps wishful) thinking goes, none of them will look weak on Big Tech.

That logic also works in reverse: Any of the three agencies could instead put pressure on the others to oppose the acquisition.