Tag Archives: FTC

The Ghost Of Instagram Haunts Microsoft’s Future



The catchy headline at the top of this blog post was the title Reuters selected for its article. It is an ominous sounding title, indicating that Microsoft will have difficulty with the Federal Trade Commission’s (FTC’s) lawsuit against the company.

Reuters reported that Facebook is Microsoft’s antitrust boogeyman. The U.S. regulatory agency, the Federal Trade Commission, is seeking to block the software titan’s $69 billion deal for gaming giant Activision Blizzard, partly to stop domination of the industry as it evolves. The FTC’s leader Lina Khan might be making up for regulators who waved through Mark Zuckerberg’s $1 billion purchase of Instagram. Though Microsoft’s deal is different, punishment under Khan’s regime seemed inevitable.

According to Reuters, the FTC is concerned that Microsoft, the owner of the Xbox gaming console, will withhold popular games made by Activision, including Call of Duty and World of Warcraft from competing platforms including Sony’s PlayStation and Nintendo’s Switch. Microsoft has tried to appease this concern. This month, the company led by Satya Nadella agreed to offer games to Nintendo and Sony for 10 years.

The New York Times posted an article titled: “Lina Kahn, Aiming to Block Microsoft’s Activision Deal, Faces a Challenge”. This is a more optimistic title than the one Reuters chose. The New York Times reported that Lina Khan has pledged to usher in a new era of trustbusting of America’s corporate giants, recently saying the agency plans to “enforce the antitrust laws to ensure maximal efficacy.”

According to The New York Times, Ms. Khan has staked that ambitious agenda on a case that may be highly challenging for the agency to win. Ms. Khan and the FTC face hurdles in trying to stop the Microsoft-Activision deal, experts said. That’s because courts have been skeptical of challenges to so-called vertical mergers, where the two businesses don’t compete directly. In this case, Microsoft is best known in gaming as the maker of the Xbox console, while Activision is a major publisher of blockbuster titles such as Call of Duty.

The New York Times also reported that Microsoft has vowed to fight the FTCs lawsuit against the Activision purchase. On Thursday, Brad Smith, Microsoft’s president, said the company had “complete confidence in our case and welcome the opportunity to present it in court.” On Friday Microsoft pointed to previous statements that it believes the deal would expand competition and create more opportunities for gamers and game developers.

The Wall Street Journal reported that in the typical antitrust case, the government challenges a horizontal merger, or one involving rivals that compete head-to-head. Such mergers, by removing a competitor from the marketplace, can increase concentration, a factor that can be used to infer harmful effects such as higher prices.

According to The Wall Street Journal, the government has struggled to win cases on vertical mergers because making claims about the potential future harms posed by such deals is less straightforward and can require complex speculation about how market forces might play out.

Personally, I think it is going to take a very long time to sort this situation out in court. This is happening during the holiday season, and I cannot help but wonder if gamers who wanted to buy a console will hold off until they know the outcome of the Microsoft – Activision Blizzard acquisition.


FTC Sues To Block Microsoft’s Acquisition of Activision



The Federal Trade Commission on Thursday sued to block Microsoft’s $69 billion acquisition of the video game publisher Activision Blizzard, charging that the massive deal would allow the Washington tech giant to suppress its competitors in gaming, The Washington Post reported.

According to The Washington Post, the lawsuit represents the FTC’s most significant effort to rein in consolidation in the tech industry since prominent tech critic Lina Khan (D) became the commission’s chair and was expected to usher in an era of antitrust enforcement characterized by a willingness to bring cases in court rather than pursue settlements with companies.

The FTC lawsuit against Microsoft could foil the company’s ambitions to become a heavier hitter in gaming frontiers. Activision is the owner of popular titles such as Candy Crush and Call of Duty, and its acquisition could bolster Microsoft in its competition with Japanese console makers Nintendo and Sony.

The Washington Post also reported that the commission voted Thursday on a party-line vote to issue the lawsuit in administrative court, with the three Democrats in favor of the complaint and one Republican against it.

The Federal Trade Commission (FTC) posted the following:

The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

In a complaint issue today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda’s titles, including Starfield and Redial Microsoft exclusives despite assurances that it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles…

…Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has millions of monthly active users around the word, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.

The Wall Street Journal reported that Sony has been the loudest critic of the planned Activision deal, arguing that it could hurt competition if Microsoft restricts access to Activision games, especially Call of Duty, due to the franchise’s exceptional popularity.

According to The Wall Street Journal, Microsoft has said it doesn’t plan to deny Sony and others access to Activision games and that its deal for the company wouldn’t hurt competition. The company has publicly pledged to give Sony and Nintendo access to new Call of Duty games on their consoles for the next 10 years. Though Microsoft doesn’t disclose Xbox sales, it has said it would still be the third-largest video game console maker after Sony and Nintendo after merging with Activision.

What does this mean for gamers? It seems to me that the FTC’s decision to sue Microsoft over the Activision Blizzard acquisition means there could be a lengthy court battle. There is no way to know how a court will decide this case. Based on what I’ve seen on social media, there are a lot of gamers who hoped the acquisition would happen. The FTC’s decision to sue is disappointing.


FTC Agrees To Remove Zuckerberg From Antitrust Suit



The Federal Trade Commission said it will remove Mark Zuckerberg, the Chief Executive of Meta, from a lawsuit to block the company’s acquisition of Within Unlimited, an artificial intelligence start-up, The New York Times reported.

According to The New York Times, the FTC said in a court filing that it agreed to drop Mr. Zuckerberg as a defendant after Meta, formerly known as Facebook, promised he would not try to personally purchase Within Unlimited. Meta had asked the agency to remove Mr. Zuckerberg as a defendant.

Within Unlimited, Inc., is a virtual reality (VR) media and technology company. Bloomberg reported that Within Unlimited, Inc. develops advanced technology for telling stories in immersive media. Within Unlimited serves customers in the State of California.

The Within Unlimited website states that their flagship product is Supernatural, a complete fitness center service for Oculus Quest that is designed with the sole purpose of giving people the time of their lives working out, so that taking on a healthy lifestyle is easy and full of joy. Within Unlimited also has Wonderscope, an iOS app for kids that uses augmented reality to transform ordinary spaces into extraordinary stories.

To me, it seems very clear that Meta’s interest in Within Unlimited is to boost its Oculus VR device. It sounds like if Meta is allowed to acquire Within Unlimited, that would remove an independent VR company into Meta’s product line.

According to The New York Times, the FTC filed its complaint with U.S. District Court for the Northern District of California, to prevent Meta and Mr. Zuckerberg from acquiring Within. The FTC included Mr. Zuckerberg as a defendant in the suit and accused him and Meta of planning to buy Within to dominate the nascent virtual-reality market and violate antitrust laws.

Politico reported that Meta only found out about the filing of the FTC’s lawsuit against it via Twitter. Politico also reported that the FTC is betting that early regulatory action will prevent Meta from holding deterministic power in the VR market.

The Federal Trade Commission posted information “Meta Platforms Inc./ Mark Zuckerberg / Within Unlimited, FTC v.” It was updated on August 19, 2022. Here is the Case Study portion:

“The Federal Trade Commission authorized a lawsuit in federal court to block the proposed merger between virtual reality (VR) giant Meta and Within Unlimited, the VR studio that markets Supernatural, a leading VR fitness app. Formerly known as Facebook, Inc., Meta sells the most widely used VR headset, operates a widely used VR app store, and already owns many popular VR apps, including Beat Saber, reportedly one of the best-selling VR apps of all time, which it markets for fitness use.

“The agency alleges that Meta’s proposed acquisition of Within would stifle competition and dampen innovation in the dynamic, rapidly growing U.S. markets for fitness and dedicated-fitness VR apps. A federal court complaint and request for preliminary relief was filed in U.S. District Court for the Northern District of California to halt the transaction.”

Personally, I’m in favor of preventing huge companies from grabbing up smaller ones for the purpose of making the smaller company’s products only accessible inside the bigger company’s “walled garden”. If the FTC wins their lawsuit it would be good for consumers – especially those who don’t want to sign up to Meta (or other “walled gardens”) to access a product or game that they were playing before the big company tried to acquire it.


FTC Will Crack Down on Education Companies That Surveil Children Online



The Federal Trade Commission (FTC) announced that it will crack down on education technology companies if they illegally surveil children when they go online to learn. In a policy statement, the Commission made it clear that it is against the law for companies to force parents and schools to surrender their children’s privacy rights in order to do schoolwork online or attend class remotely.

According to the FTC, under the Children’s Online Privacy Protection Act, companies cannot deny children access to educational technologies when their parents or school refuse to sign up for commercial surveillance.

“Students must be able to do their schoolwork without surveillance by companies looking to harvest their data to pad their bottom line,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Parents should not have to choose between their children’s privacy and their participation in the digital classroom. The FTC will be closely monitoring this market to ensure that parents are not being forced to surrender to surveillance for their kids’ technology to turn on.”

The press release notes that technology in the classroom has grown substantially in recent years, a trend that accelerated during the early months of the COVID-19 pandemic, when many schools had to switch to virtual learning. The FTC states that parents and schools are forced to navigate an industry that is dominated by the commercial surveillance business model. These services have the capacity to collect a trove of personal information and there are serious concerns that this data may be used to build profiles of kids.

As a former teacher, who stopped teaching long before the COVID-19 pandemic began, I never had to worry about educational software gathering data from my students. It feels incredibly concerning to think that some education companies chose to surveil children who engage in online learning. Those companies need to find some other way to make money, without building a database on children. I cannot imagine that any teacher would want that sort of thing to happen to their students.

The FTC notes that Ed Tech providers must comply fully with all provisions of the COPPA (Children’s Online Privacy Protection Act). The FTC is going to vigilantly enforce the law to ensure that companies covered by COPPA are complying with all of the rule’s provisions including:

Prohibitions Against Mandatory Collection: Companies cannot require children to provide more information than is reasonably needed for participation in an activity.

Use Prohibitions: Ed tech providers that collect personal information from a child with the school’s authorization are prohibited from using the information for any other commercial purpose including marketing and advertising.

Retention Limitations: Ed tech providers are prohibited from retaining children’s personal information for longer than is necessary to fulfill the purpose for which it was collected and therefore cannot keep such data just because they might want to use it in the future.

Security Requirements: Ed tech provides must have procedures to maintain the confidentiality, security, and integrity of children’s personal information.

According to Govtech.com, the FTC’s announcement come as student data privacy becomes a growing concern in K-12 schools across the country, where officials have adopted an array of digital learning tools during shifts to and from remote learning in recent years. As of 2019, 40 states had enacted one or more K-12 data privacy laws to protect students from companies monitoring students for advertising purposes, and others are in the process of doing so.


FTC Pushes Back Against Facebook’s Removal of NYC Ad Observatory



The Federal Trade Commission (FTC) sent a letter to Mark Zuckerberg regarding the company’s removal of NYC’s Ad Observatory from the platform. The letter was written by Acting Director of the Bureau of Consumer Protection, Samuel Levine.

Facebook posted on its Newsroom that it had disabled the accounts, apps, Pages, and platform access associated with NYU’s Ad Observatory Project and its operators.

Facebook claimed that the researchers were gathering data by creating a browser extension that was programmed to evade Facebook’s detection system and scrape data such as usernames, ads, links to user’s profiles and ‘Why am I seeing this ad?’ information, some of which is not publicly viewable on Facebook.”

Mozilla debunked Facebook’s claim, pointing out that Mozilla decided to recommend Ad Observer because their review of it assured them it respected user privacy. According to Mozilla, it does not collect personal posts or information about friends and it does not compile a user profile on its server.

Here are some parts of the letter from the FTC to Mark Zuckerberg:

“I write concerning Facebook’s recent insinuation that its actions against an academic research project conducted by NYU’s Ad Observatory were required by the company’s consent decree with the Federal Trade Commission. As the company has since acknowledged, this is inaccurate. The FTC is committed to protecting the privacy of people, and efforts to shield targeted advertising practices from security run counter to that mission…

“…Had you honored your commitment to contact us in advance, we would have pointed out that the consent decree does not bar Facebook from creating exceptions for good-faith research in the public interest. Indeed, the FTC supports efforts to shed light on opaque business practices, especially around surveillance-based advertising…”

Clearly, the FTC does not agree with Facebook’s decision to remove the NYU’s Ad Observatory project from its platform. I wonder what Facebook is trying to hide? It must have something to do with the political ads the Ad Observatory was studying.


FTC Voted to Ramp Up Enforcement Against Illegal Repair Restrictions



The Federal Trade Commission (FTC) unanimously voted to ramp up law enforcement against repair restrictions that prevent small businesses, workers, consumers, and even government entities from fixing their own products. This decision essentially puts the “right to repair” in place.

The Commission voted 5-0 to approve the policy statement during an open Commission meeting that was live streamed to its website.

“These types of restrictions can significantly raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency,” FTC Chair Lina Khan said during an open Commission meeting. “The FTC has a range of tools it can use to root out unlawful repair restrictions, and today’s policy statement would commit us to move forward on this issue with new vigor.”

In a policy statement, the Commission said it would target repair restrictions that violate antitrust laws enforced by the FTC or the FTC Act’s prohibitions on unfair or deceptive acts or practices. The FTC also urged the public to submit complaints of violations of the Magunson-Moss Warranty Act, which prohibits, among other things, tying a consumer’s product warranty to the use of a special service provider or product, unless the FTC has issued a waiver.

The FTC’s statements come days after the White House endorsed similar rules in an executive order on economic competition. That part of the executive order specifically states that the FTC will exercise rulemaking authority regarding several areas, including “unfair anticompetition and surveillance practices on third-party repair or self-repair of items, as imposed by powerful manufacturers that prevent farmers from repairing their own equipment.”

That part refers to farmers who use John Deere tractors, and who have sued for the right to repair their own tractors. Currently, some farmers face legal repercussions when they try to fix their machinery themselves.

The FTC could choose to use its new policy to prevent companies like Apple, Microsoft, Amazon and Google from working to put a stop to laws that would require them to provide genuine repair parts and device schematics to independent repair shops.


U.S. Senate Confirms Lina Khan as FTC Commissioner



The U.S. Senate has confirmed Lina Khan as the commissioner of the Federal Trade Commission. The Verge reported that the vote was 69-28. This gives Democrats a majority on the FTC. Lina Khan has filled a vacancy left by Republican appointee Joseph Simons who resigned in January.

The Verge pointed out that Lina Khan’s confirmation comes while Congress is “preparing to take drastic action to curb the power big tech companies have on digital markets.” Those efforts include five bipartisan bills that are intended to chip away at the power of big tech companies.

The New York Times reported that Lina Khan is “a prominent critic of the nation’s largest tech companies”. According to The New York Times, Lina Khan’s confirmation gives her a central position at the agency that investigates antitrust violations, deceptive trade practices and data privacy lapses in Silicon Valley.

Ms. Khan will help regulate the kind of behavior highlighted for years by critics of Amazon, Facebook, Google, and Apple. She told a Senate committee in April that she was worried about the way tech companies could use their powers to dominate new markets.

Lina Khan tweeted: “I’m so grateful to the Senate for my confirmation. Congress created the FTC to safeguard fair competition and protect consumers, workers, and honest businesses from unfair & deceptive practices. I look forward to upholding this mission with vigor and serving the American public.”

Politico reported that the outcome of the vote to confirm Lina Khan gives Democrats the majority at the FTC for the first time under President Joe Biden. The other two Democrats on the FTC are acting Chair Kelly Slaughter and Commissioner Rohit Chopra.

According to Politico, NetChoice, a tech lobbying group, said it was “disheartened” by Lina Khan’s confirmation to the FTC. Google and Facebook are reportedly members of NetChoice.

Overall, I think that it is a good sign when tech lobbying group is unhappy with the confirmation of a new person on the FTC. It means that NetChoice understands that it will have a very difficult time getting its way with three Democrats on the FTC. I believe that upcoming decisions made by the FTC will likely result in good things for consumers.