The Microsoft Acquisition of Activision: Neither Horizontal nor Vertical

36 Pages Posted:

See all articles by Brianna Alderman

Brianna Alderman

Harvard University

Roger D. Blair

University of Florida

Javier D. Donna

University of Miami Herbert Business School; Rimini Centre for Economic Analysis

Date Written: March 21, 2025

Abstract

We study the Microsoft-Activision acquisition through the lens of a complementary-product merger. When two complementary good producers consolidate, the merger is not horizontal because the two firms do not produce substitutable goods. Nor is the merger vertical, as neither firm supplies the other. We develop an economic model to study these types of mergers that allows for the possibility of rivals exiting the market. Three main conclusions flow from our analysis. (1) The welfare effects of the Microsoft-Activision acquisition are ambiguous; they depend on several industry factors. (2) One will not obtain the correct welfare effects using an incorrect vertical structure; harm to consumers will typically be larger in a complementary-product merger relative to a vertical one. (3) Consumer harm associated with rivals' exit due to the merger might substantially reduce welfare even if it is a welfare-enhancing merger absent exit. Our analysis provides an analytical roadmap for the antitrust enforcement authorities regarding the theories of harm in complementary-good mergers.

Keywords: Antitrust, Competition Policy, Regulation, Complementary Mergers, Vertical Mergers, Merger Identification K21, K41, L13, L42, L44, L52

Suggested Citation

Alderman, Brianna and Blair, Roger D. and Donna, Javier D., The Microsoft Acquisition of Activision: Neither Horizontal nor Vertical (March 21, 2025). Available at SSRN: https://ssrn.com/abstract=

Brianna Alderman

Harvard University ( email )

Roger D. Blair

University of Florida ( email )

342 Matherly Hall
Gainesville, FL 32611-7140
United States
352-392-0179 (Phone)
352-392-7860 (Fax)

Javier D. Donna (Contact Author)

University of Miami Herbert Business School ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

Rimini Centre for Economic Analysis ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
69
PlumX Metrics