That is definitely a bad outcome but there’s only one body to blame for this, and that’s the FTC.
As a Canadian I look at the US as horrendously underregulated, but we’re not too far behind. The reality is that our elected left-wing parties in both nations are quite neoliberal, not as much as the right wing but enough to do a poor job of preventing anti-consumer markets.
In Canada we let two massive telecommunication companies merge earlier in the year. When it came to cell phone plans we had slim pickings to begin with. For the past 3 years I’ve been paying $75 for a 2 GB plan on a prepaid phone. I was getting charged $0.50 each time friends sent me texted images. Half of that is on me for not looking for a deal (which I recently did and I’m paying $45 for 20 GB now, thankfully), but I shouldn’t have to hunt for a deal just so that I’m not ripped off. Anyways, our government allowed that but then had the gall to claim that this deal was anti-competitive.
If a person like me, who is as pro-regulation as they come, is pointing out how poorly the FTC handle this it says a lot about how they dropped the ball here.
The EU, in where they squeezed out concessions from Microsoft, did exactly what should be done.
This situation also open my eyes to why the FTC is so ineffectual: They’re a little too concerned about mergers and acquisitions over business practices. We’re talking about a console industry that was trending towards only having one home console machine. That is, until Spencer convinced Nadella that consoles were still worth pursuing. We have companies like Home Depot and Walmart that have eradicated small businesses. This wasn’t through any M&A.
Vertical mergers often help consumers at the end of the day because they can result in cheaper prices. The worst case scenario are status quo prices with higher profit margins. The only time it’s a problem is when all suppliers are purchased, something that wasn’t the case here.
The FTC lost sight of their purpose. They don’t seem to realize that Microsoft serves various markets and their entrance into those markets is a good thing for competition in those markets. The Zune died, along with many other great mp3 players, and the iPod completely dominated the market. Windows Phone died, along with Blackberry, and the phone market is lesser for it. The Xbox wasn’t too far behind. The FTC seems keen to have fewer competitors in the market if it’s a big tech company trying to get in that market (a market full of other big tech companies).
It just doesn’t make sense at all.
