Google, Microsoft and the threat from overmighty trustbusters

There are mergers to worry about and mergers to welcome. In the first category are tie-ups between biggish firms in the same line of business. In these “horizontal” mergers, a competitor is taken out of the market, removing a constraint on prices. In such cases, competition authorities will investigate the merger and may block it. Other mergers have historically been considered less troublesome. If a firm buys another in an adjacent line of business (a conglomerate merger) or if a supplier buys a customer (a vertical merger), the effects on competition have been seen as benign.

But that has changed in recent years. More and more non-horizontal mergers are being challenged by antitrust authorities. In September America’s Federal Trade Commission (ftc) lost its challenge in court to a tie-up between Illumina, which provides “next-generation” dna-sequencing tools, and Grail, a developer of early cancer-detection tests, which rely on Illumina’s technology. The ftc is appealing the judgment. In October Britain’s Competition and Markets Authority (cma) forced Facebook to undo its purchase of Giphy, a supplier of gifs to social-media platforms. On February 8th, the cma issued an initial finding that the acquisition by Microsoft, maker of the Xbox games console, of Activision Blizzard, a game studio, would reduce competition in the industry.