February 21, 2023

Antitrust & Competition Technology 2022 Year in Review

2022 saw a major uptick in antitrust scrutiny and enforcement, primarily related to vertical transactions by large technology companies. Meta/Within, Microsoft/Activision, and Broadcom/VMware (among others) faced resistance from, or were challenged by, antitrust agencies alleging theories of harm ranging from the traditional (i.e., input foreclosure)1 to the more novel (i.e., a loss of potential future competition). We expect this trend to continue in 2023, with global agencies continuing their skepticism of vertical transactions and exploring all potential theories of harm, novel or otherwise.

Background and Updates to Technology Transactions We’re Monitoring

Meta/Within Update

The Federal Trade Commission (FTC) filed a complaint in July seeking to block Meta’s acquisition of the virtual reality (VR) app maker Within.2  Meta makes Meta Quest, a leading VR hardware device. It also operates the Oculus Quest app store and sells several best-selling VR apps. Within’s flagship product is a VR fitness app called Supernatural, which provides users with virtual fitness classes for a monthly subscription fee.

The FTC’s complaint relied on two varieties of the potential competition theory of harm: “actual” and “perceived” potential competition. Under the FTC’s actual potential competition theory, but for the acquisition of Within, Meta would have become a competitor in the dedicated VR fitness app market. In its filings and at trial, the FTC tried to establish that Meta had the “resources, capabilities, and incentives to enter the VR Dedicated Fitness App market” and “intended to do just that but for the proposed acquisition” of Within.4 The FTC’s other theory of harm, a perceived potential competition theory, alleges that even if Meta wouldn’t have actually entered the market, Within perceived Meta as a potential entrant, and the elimination of Meta’s perceived competition would therefore substantially lessen competition.5

A three-week trial in the Northern District of California began on December 8, 2022. On February 1, 2023, the court ruled in favor of Meta, rejecting the FTC’s request for a preliminary injunction6 and clearing the way for the acquisition to close after the agency decided not to appeal the decision. 

Unsealed on February 6, Judge Edward Davila’s decision ultimately found that the agency had failed to meet its burdens with respect to the potential competition theories it had put forth. Although the FTC lost on the facts, however, Davila rejected the parties’ claims that these potential competition theories were not legally cognizable or were subject to extremely high thresholds of proof. Further, Davila accorded “little weight” to the testimony provided by Meta’s employees during the litigation, concerned that such “ex post facto testimony” would be inherently and unavoidably biased. With regard to Meta’s motives and plans, Davila looked instead to “contemporaneous statements made by Meta employees” (i.e., ordinary-course documents). 

The ultimate outcome for the agency is mixed. While this decision adds to a recent string of losses for the FTC, the agency now has a road map for future potential competition cases, with respect to both the legal standards/burdens and the types of evidence about the specific parties and the product markets more generally likely to be deemed probative in that context.

While the FTC has historically dropped parallel administrative actions when it loses a preliminary injunction action in federal court,8 as of this writing, the FTC has not indicated whether it will move forward in this instance. Considering that the agency under Chair Lina Khan has bucked unwritten rules in the past, we would not be surprised to see the FTC use every available resource to challenge the transaction and proceed with the administrative trial. 

Microsoft/Activision Update

Microsoft’s acquisition of Activision, which was announced in January, ran into several major challenges in 2022. The deal has a clear vertical component given that Microsoft manufactures Xbox, one of the three top-selling video game consoles, and Activision Blizzard makes one of the most popular video game franchises, Call of Duty. Activision Blizzard also makes popular PC and mobile video games, such as World of Warcraft and Candy Crush. Microsoft’s acquisition of a strong and innovative video game developer could be seen as a move into business lines that are distant from, though in the same ecosystem as, the company’s “core” business lines including PC software (Microsoft Office) and video game hardware (Xbox).

Microsoft has publicly committed to making Call of Duty available to its biggest rivals, PlayStation and Nintendo, for 10 years once the game launches on Microsoft platforms.9  Although Nintendo accepted the proposal, Sony has vehemently opposed the transaction, arguing it would harm competition around the globe. Behavioral fixes like the one proposed by Microsoft have historically been acceptable to antitrust regulators. But in recent years, regulators’ views, including those in the EU, UK, and US, have shifted toward greater skepticism of vertical transactions and the ability of behavioral remedies to alleviate competition concerns. 

On December 8, 2022, the FTC filed an administrative lawsuit challenging the merger.10  In its complaint, the FTC alleges the acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.”11 In other words, the FTC alleges that Microsoft could block new Call of Duty games from being offered on its rivals’ consoles, giving the Xbox an unfair advantage. The agency also focused on Microsoft’s burgeoning subscription and cloud-based gaming service (Game Pass), where subscribers get access to hundreds of games for a single monthly fee. Adding Call of Duty (and other Activision Blizzard games) to this service and blocking it from rivals (e.g., PlayStation Plus) would also create an unfair advantage, according to the agency. 

As Microsoft gears up for the administrative trial in the US, the Competition and Markets Authority (CMA) issued its Provisional Findings in its Phase 2 investigation.12 The CMA provisionally found that the merger gives rise to a substantial lessening of competition (SLC) regarding (i) input foreclosure in the supply of console gaming in the UK, based on a finding that Microsoft would find it commercially and financially beneficial to make Call of Duty exclusive to Xbox or available on Xbox on materially better terms than on PlayStation, and (ii) input foreclosure in the (nascent) cloud gaming services market in the UK.

As is standard in cases where an SLC has been identified, the CMA also published a Notice of Possible Remedies. This document acts as a formal starting point for the discussion of remedies with the merging parties and soliciting views from the market. The CMA’s current position is that Microsoft should divest the Activision Blizzard businesses associated with its Call of Duty game, or for the merger to be prohibited entirely. Unsurprisingly, the CMA has shown reluctance to consider behavioral remedies, which could just be posturing at this stage; however, the CMA (in common with other authorities) is willing to accept behavioral remedies only in limited circumstances, so Microsoft has a high bar to convince the CMA that a behavioral commitment would be workable in this case (e.g., a commitment to supply Call of Duty to its rivals).

The European Commission (EC) also continues its own in-depth investigation and, as with the FTC and CMA, is expected to oppose the deal and/or require significant remedies. The deal is also still under review by authorities in Australia, Japan, New Zealand, and South Korea.


Microchip maker Broadcom’s proposed acquisition of the software company VMware has generated significant headwinds despite the fact that the parties seem to be in adjacent, not horizontal or vertical, markets. Broadcom is a semiconductor company that primarily designs and sells (but does not manufacture) chips for the wireless and broadband communication industry. VMware, by contrast, is in the cloud-computing and visualization space, providing cloud infrastructure and virtual machine services, largely for enterprise customers.

The FTC issued second requests to the parties in early July, and the EC announced an in-depth investigation of the transaction in late December 2022. When announcing the investigation, Margrethe Vestager, the EC’s head of antitrust enforcement, said the commission had concerns that Broadcom could eliminate its competitors’ access to VMware’s virtualization software. The EC previously investigated Broadcom for its sales tactics, resulting in a seven-year consent decree.

The additional scrutiny could be due to the strength of Broadcom’s chips and VMware’s cloud management software in the broader cloud ecosystem. Or it may simply be a reflection of a more aggressive antitrust environment, particularly with respect to large players in the technology space that have been scrutinized by antitrust agencies for either conduct or proposed mergers in the past.

Conclusions and Predictions for 2023

2022 saw global antitrust agencies taking an aggressive approach to vertical and adjacent transactions in the technology space. We expect this trend to continue in 2023. Even if certain transactions are ultimately able to proceed (such as Meta/Within after winning in federal court), global antitrust agencies are signaling they will leave no stone unturned in their investigations of transactions, including those that lack traditional horizontal concerns. 


[1]CRN, Broadcom-VMware Deal Under Pressure In US, EU: Five Things To Know (Dec. 22, 2022).
[2]Complaint for a Temporary Restraining Order and Preliminary Injunction, FTC v. Meta Platforms Inc., Mark Zuckerberg, and Within Unlimited, Case No. 5:22-cv-04325 (N.D. Cal. July 27, 2022) (hereinafter “Meta/Within Complaint”).
[3]Supernatural, “Get Supernatural.”
[4]Plaintiff’s Reply to Defendants’ Opposition to Prelim. Injunction Motion, FTC v. Meta Platforms Inc., Mark Zuckerberg, and Within Unlimited, Case No. Case 5:22-cv-04325, at 1 (N.D. Cal. Nov. 21, 2022).
[5]Plaintiff’s Mem. of Points and Authorities in Support of Mot. for a Prelim. Injunction, FTC v. Meta Platforms Inc., Mark Zuckerberg, and Within Unlimited, Case No. Case 5:22-cv-04325, at 211 (N.D. Cal. Oct. 31, 2022), available at
[6]Order Denying Plaintiff’s Motion for Preliminary Injunction, FTC v. Meta Platforms Inc., Mark Zuckerberg, and Within Unlimited, Case No. Case 5:22-cv-04325, at 211 (N.D. Cal., 2022), available at
[7]The Verge, “Meta wins fight to buy VR startup Within” (updated Feb. 4, 2023); Reuters, “US FTC will not appeal decision allowing Meta to purchase VR content maker Within” (Feb. 6, 2022).
[8]The agency did not bring a preliminary injunction in federal court in Illumina/GRAIL due to a belief the parties would not consummate over the EU’s ongoing objections.
[9]CNBC, “Microsoft says it will bring Call of Duty to Nintendo for 10 years if Activision deal closes” (Dec. 7, 2022).
[10]Similar to Illumina/GRAIL, the FTC is not currently seeking a preliminary injunction in federal court to block the transaction due to Microsoft’s ongoing engagement with the EC.
[11]Administrative Complaint, In re FTC v. Microsoft Corp. and Activision Blizzard Inc., Docket No. 9412 (Dec. 8, 2022).
[12]Competition & Markets Authority, “Anticipated acquisition by Microsoft of Activision Blizzard, Inc.: Provisional findings report ” (February 2023). Available at: