Letters from CAMP

Letters: Eyes on the Skies

May 12, 2024

Welcome to Letters from CAMP, a newsletter on anti-monopoly activity in Canada and abroad, brought to you by the Canadian Anti-Monopoly Project. In this installment we have:

  • Competition Bureau aims new market study powers at Canada’s airline market
  • Microsoft shutters successful game developers in the wake of Activision acquisition
  • Apple makes it a little too obvious with its most recent iPad commercial

Let’s dive in.

Competition Bureau Looks to the Skies in New Market Study

Fresh off the heels of its deep dive into Canada’s grocery sector, Canada’s Competition Bureau is turning its sights on competition in the airline industry. The market study comes at a critical time, with the recent shutdown of low-cost carrier Lynx Air after just two years of operation highlighting the long-standing barriers to competition in a market dominated by the duopoly of Air Canada and WestJet.

What makes this airline industry probe noteworthy is that the Bureau will be flexing new regulatory muscles for the first time. Amendments to the Competition Act that became law late last year have armed the watchdog with stronger tools, in line with international counterparts. This allows the Bureau to compel information from companies to inform market studies, rather than just asking nicely and hoping for the best as it had in the past.

With these enhanced powers, the Bureau can actually conduct a comprehensive examination of the competition issues plaguing Canada’s airline sector, digging into areas like pricing strategies, potential collusion between major carriers, the impact of mergers and acquisitions, and how policy changes might spur more competition.

The outcome of this investigation remains to be seen, but it has the potential to be a watershed moment for competition in Canadian aviation. Armed with its new regulatory arsenal the Competition Bureau could identify serious competition issues and push for reforms to inject rivalry into the market and improve affordability and choice for travelers.

Microsoft Shutters Successful Studios, Torches Games Industry Credibility

Last week, Microsoft made the surprising announcement that it would be shutting down several of its Bethesda game studios, including Tango Gameworks (Hi-Fi Rush), Arkane Austin (Redfall), Alpha Dog Games (Mighty Doom), and Roundhouse Studios. While the official reason given was that Xbox and Bethesda’s studios had become overextended, former Microsoft PR manager Brad Hilderbrand provided additional spin on the rationale behind these closures.

The first issue is the Game Pass subscription model that Microsoft has dived head first into for its gaming business. While Game Pass has been successful in attracting subscribers, it has meant new games miss traditional sales goals as players opt to play them as part of their subscription rather than purchasing them outright. This creates a situation where even studios that create popular and critically acclaimed games like Hi-Fi Rush only receive a small revenue bump from being featured on Game Pass before quickly falling off the radar.

The second factor is Microsoft’s $70 billion acquisition of Activision-Blizzard which closed late last year. In the wake of the megamerger, despite promises made to studios, gamers and regulators, there is now immense pressure on Microsoft to start recouping those costs and drastically cut expenses from its game division.

The combination of factors means that while Activision mega-franchises like Call of Duty are likely to weather the storm, smaller studios creating unique and interesting games under the Microsoft mothership are at risk of being casualties of the giant’s shifting priorities. While these closures are part of broader struggles within the games industry, they show how empty the promise of consolidation is to the future of one the largest entertainment markets on the planet.

Too on the Nose?

Apple’s recent “Crush” ad for the new iPad Pro has struck a chord at a time when a handful of technology giants loom large in our economies. The ad, which features a hydraulic press crushing various artistic tools and entertainment relics, struck a nerve with creatives who saw it as a tone-deaf symbol of Apple’s derision for the mediums they rely on for self-expression and their livelihoods.

But the backlash is not just about a single misguided marketing campaign, but rather a growing unease with the dominance of tech giants like Apple in our daily lives. As these companies continue to expand their reach and influence they risk crushing the diversity and individuality that defines human creativity. With its literal depiction of the destruction of instruments, art supplies and arcade machines to make way for a sleek, homogenized product, the ad was simply too on the nose about the looming power of current day Apple.

While Apple decided to pull the ad, the underlying issue that brought the controversy remains. Around the world we continue to grapple with the impact of monopolies on our society. The “Crush” ad was just a PR misstep. Only structural change to our economies can push back against the forces that seek to flatten and homogenize our world.

If you have any monopoly tips or stories you’d like to share, drop us a line at hello@antimonopoly.ca

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