Whether you call it the next wave of neo-Brandeisian ideology or the codification of “big is bad,” you might have noticed that antitrust enforcement has recently taken on a disproportionate focus on size and a bias against mergers and acquisitions. Since market concentration is vulnerable to manipulation through market definitions, enforcers shouldn’t let size distract from the potential acquisitions have to benefit consumers.
Following Microsoft’s proposed acquisition of the gaming company Activision Blizzard, the Federal Trade Commission (FTC) filed a complaint. The crux of the FTC’s argument relies on the intersection of gaming consoles and a certain category of gaming companies known as AAA. These companies have ample resources to invest in high-quality game development. Examples include the popular titles of Assassin’s Creed, Call of Duty and Halo.
While Microsoft has acquired game companies before, the FTC’s concern is that by acquiring Activision Blizzard, which owns popular franchise games like Call of Duty, the company will be able to use games to lure consumers to its console and streaming services.
To aid its case, the FTC relies on an extremely narrow market definition. The proposed relevant markets include subscriptions and cloud-based services, but most perplexing is the proposal to limit the relevant gaming consoles to two. Those consoles are Microsoft’s Xbox series X|S and Sony’s PlayStation5.
Limiting the analysis to two console makers ignores other gaming consoles, PCs, tablets and phones that can all host games. However, even with this definition, it’s difficult to argue that Microsoft can dominate the console marketplace relative to those two companies.
According to a forecast from the gaming market analysis company DFC Intelligence, Microsoft has less than half the video game console software market share of Sony, and trails Nintendo, which the FTC excluded. This position is not expected to drastically change. Even with favorable projections, DFC Intelligence still shows Microsoft trailing both companies in 2026.
The FTC’s complaint includes online gaming and subscription memberships as separate markets, but these systems are interconnected. According to polling from Morning Consult, the most popular platforms for video games were mobile phones, even among avid gamers, and consoles were usually the next preferred choice except for adults 65 and older. PCs were also popular among avid gamers, with 42 percent reporting use of online PC gaming and 26 percent reporting offline PC gaming. Platforms for video games are largely interchangeable, as players make use of a variety of sources.
Limiting a market to two gaming consoles doesn’t exactly reflect reality for video game players, but defining markets always involves some degree of subjectivity. This isn’t the first time the FTC has narrowly defined markets. In its complaints against Meta and its proposed acquisition of Within Unlimited, the FTC suggested one of the relevant markets was “virtual reality-dedicated fitness apps.” The court ultimately accepted the market definition, despite its narrowness.
This subjectivity and potential for narrow market definitions reveal why tools like the Consumer Welfare Standard (CWS) are important in antitrust enforcement. The CWS guides enforcement to focus on the impact on the consumer, usually in the form of prices, quality and output, rather than subjective indicators. This lens is less susceptible to variations in market definitions so long as the result will benefit the consumer.
While the FTC fears that Microsoft will use Activision Blizzard’s titles to bolster its online content library, that could be a win for consumers. Streaming access has been the trend for multiple forms of entertainment and it looks like gaming could be next. As polling has already established, gamers use multiple devices to access their games, and streaming or cloud content libraries could ease the transition between devices for consumers. While limiting access to popular games could harm some consumers, Microsoft has already finalized two 10-year agreements to bring Call of Duty to Nintendo platforms and to bring Xbox titles to the cloud gaming service GeForce NOW.
Rather than punish size, as some current efforts at antitrust enforcement aim to do, the CWS promotes competition and success so long as it benefits consumers. Bias against mergers and acquisitions shouldn’t get in the way of consumer gains.