FTC Chairman Lina Khan on gaming, augmented reality and virtual reality

The Federal Trade Commission pays particular attention to the video game market, which has seen an unprecedented level of consolidation in recent years during a period of record mergers and acquisitions activity.

Speaking to Protocol, FTC Chair Lina Khan said the gaming market was “a priority” for the agency and its renewed regulatory efforts, especially fast-growing markets such as augmented reality and Virtual.


“I think these kinds of nascent and expanding markets are definitely on our radar and in the lead,” Khan told Protocol. “Especially since VR or AR [are] also becoming an important part of how some of these games work for users and [how] users interact.”

AR and VR in particular is “one area where we’ve been fortunate enough to be able to bring in more technologists who integrate with our lawyers and our teams,” Khan added, “to make sure, just at a level fundamental, we are able to fully understand how these technologies even work.”

“Having that expertise and those skills on board is really, for us, a crucial first step,” Khan said.

The gaming industry has been a hotbed of acquisitions and funding since 2020, when the pandemic created a new wave of gaming interest and spending. This, in turn, has invited a new level of regulatory scrutiny for an industry that, despite generating nearly $200 billion in global revenue in 2021, has gone largely unchecked for the past few decades.

Six of the 10 biggest video game acquisitions in history have taken place or been announced since the start of 2020. in 2020, may have a monopoly hold on the virtual reality industry. This market share is due to a series of crucial acquisitions that Meta has made since buying Oculus VR in 2014. Meta now intends to expand aggressively into the AR and video markets. mixed reality before competitors like Apple can beat it.

In 2021, there were nearly 1,200 video game transactions valued in total at more than $85 billion – a 161% jump in transaction value from 2020, according to a April report of investment firm Drake Star Partners. In the first three months of 2022 alone, there have already been 387 deals totaling nearly $100 billion, with the majority of the record deal value coming from Microsoft’s planned $69 billion acquisition of World of Warcraft and Call of Duty publisher Activision Blizzard, the biggest – ever deal in the industry.

Khan and the FTC are investigating Activision’s deal, as well as Sony’s much smaller proposed acquisition of Destiny developer Bungie. While both deals are expected to go ahead, antitrust experts say the FTC could seek behavioral concessions from Microsoft and Sony in areas such as platform exclusivity.

“We take a lot of care to make sure that we are mindful not just of some of the past damage that has already been identified, but some of the new and coming damage,” Khan told Protocol. “And so obviously, [gaming] is an area where we see M&A activity. This is an area where we are devoting resources to ensure that we anticipate what is going to be the next set of challenges and to ensure that we are fully prepared and able to identify how some of our powers and tools are able to protect people in this context.”

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