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The biggest video game companies are gobbling up the competition faster than ever while so far escaping significant resistance from antitrust regulators.

Why it matters: Gaming has grown into one of the world's largest media industries but has yet to face the scrutiny other tech sectors routinely encounter over how business practices affect competition, consumers or workers.

State of play: The two largest acquisitions in video game history have happened since 2022 began, and 2021 saw over 250 gaming deals, totaling over $38 billion.

Microsoft has been on a spending spree for years, including a $7.5 billion ZeniMax/Bethesda deal in 2020 and its recent $69 billion plan to acquire  Activision Blizzard.

Sony has steadily snatched up top tier studios, including its recent bid for Destiny creator Bungie, and now owns the makers of acclaimed game series like Uncharted, Spider-Man and Horizon.

Meanwhile, China-based conglomerate Tencent became the majority shareholder of at least seven studios in 2021.

Deals in Big Tech and media now routinely face hurdles from regulators, lawmakers and activist groups.

The FTC has an ongoing antitrust suit against Facebook parent Meta over its attempts to bury competitors.

Amazon’s bid to buy MGM has led to progressive groups lobbying the FTC to block sale.

While the WarnerMedia-Discovery merger was recently approved, it faced pushback from dozens of lawmakers.

Yes, but: Although game industry titans may have free rein to close deals. they're still keeping a close eye on their watchdogs.

Microsoft came out on Wednesday with a preemptive, full-throated welcome of regulators questions, pledging open marketplaces in the future and support for the Open Markets App antitrust bill.

And, in its support for more open app stores, Microsoft shifted the blame to evergreen antitrust targets like Apple and Google.

Additionally, now that the FTC has antitrust activist Lina Khan at the helm, many expect the agency to assert a more active role in scrutinizing big buys.

And for all the bluster, regulators and lawmakers have mostly focused their antitrust ire at Big Tech and let other mega content deals pass.

 A federal appeals court approved the 2019 merger between AT&T and Time Warner.

Disney bought 21st Century Fox's entertainment assets for $71 billion in 2019.

Comcast acquired NBC Universal in 2011 for $14 billion. 

Still, these deals involved intense agency scrutiny, divestment agreements and government pushback. Gaming's consolidation has received nothing close to that thus far.

The big picture: Defining what constitutes a monopoly or stifles competition in an industry can be tricky — especially in a fragmented field like games.

To prove that a company has a monopoly, regulators have to draw lines around specific markets that are being dominated, and that can be done in countless ways. 

Gaming could be one big market, or split among mobile, console and PC gaming, or subdivided many other ways. 

Microsoft has been clear that it’s after Blizzard Activision for the mobile gaming footprint the acquisition will provide.

If antitrust questions arise, Microsoft can argue that the deal will bolster competition in that market.

Flashback: The video game world has long been defined by rivalries and arms races — think Nintendo vs. Sega, or Xbox vs. Playstation.

But today, even if there's no single gaming monopolist, the major players run the industry as an exclusive club.

Google, even with all its assets and leverage, hasn’t been able to break into the industry with its Stadia service.

What’s next: In a seemingly make or break moment, Congress is considering a few antitrust bills that could make things complicated for future acquisitions — in gaming as everywhere else in tech.

Meanwhile, both Microsoft’s Activision Blizzard deal and Sony’s Bungie bid will take a while to jump through the necessary legal hoops before they’re completed.

Gaming is antitrust regulators' blind spot

The industry is consolidating at a breakneck pace, but its deals don't often raise red flags.

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Antitrust law

Gaming

Big Tech

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Closer

Axios Closer

It's a good thing Jack Dorsey pivoted Square to Block last year.

Catch up quick: Apple is set to transform iPhones into contactless credit card readers and payment processors later this year. That could, in theory, threaten Square's existing payment devices business.

Shares of Block traded down after news broke and closed the day 0.5% lower.

The big picture: Payment processing is just a small part of Square’s value to merchants.

Dorsey's vision for Block now relies more on blockchain and crypto.

Go deeper: iPhones to become credit card readers

Square dongle could be in trouble

Apple's move to turn iPhones into contactless credit card readers could threaten Square's business.

Square, Inc.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Fintech Deals

Apple is set to transform iPhones into contactless credit card readers and payment processors later this year.

Why it matters: The upcoming “Tap to Pay” feature — announced Tuesday — could make it easier for merchants to conduct their business and accept contactless payments without any extra equipment.

The big picture: With Tap to Pay, Apple will also support Google Pay, Samsung Pay, and other contactless payment methods on Android devices.

How it works: Tap to Pay is powered by near field communications, or NFC, which is used today by contactless credit cards and in payments made from phones to point-of-sale terminals.

The technology has been present in the iPhone since 2014. However, merchants will need an iPhone Xs or later to receive Tap to Pay payments.

The actual payment processing will be handled by Apple partners, the first of which will be fintech startup Stripe. 

Stripe plans to make Tap to Pay available to third-party developers who use its Terminal SDK to build their own point-of-sale products, and began accepting signups today for when the program goes live.

While Stripe will be the first partner enabling Tap to Pay, Apple says to expect other developers and platforms to follow.

By the numbers: The launch comes as contactless payments have exploded, partly out of convenience and partly due to the Covid-19 pandemic.

According to Visa, there were more than 400 million contactless cards in circulation last year. 

Meanwhile, there are close to 2 billion active Apple devices now, CEO Tim Cook told investors last month. About a billion of those are likely iPhones. 

The intrigue: Shares of Block, parent company of Square, which makes a credit card reader dongle popular with small businesses, traded down slightly after news broke.

While the company pioneered the space, this latest development ultimately doesn’t have to be bad news.

Our thought bubble: After all, it’s in Apple’s best interests to allow Square and other app developers to offer the feature to merchants through their payment platforms. 

In addition, payment processing is just a small part of Square’s value to merchants. They also offer loyalty rewards, banking, payroll and inventory functions.

And while Apple might be able to onboard new merchants who don’t currently have a POS system, it’s unlikely a business already deep in the Square ecosystem is going to switch.

To learn more about what's happening in fintech and mobile payments, sign up for the Axios Pro Fintech Deals newsletter.

iPhones to become credit card readers

Illustration of a small person at a giant iphone screen with a dollar bill on it, and a person behind the iphone in the dark

Apple

TikTok Head of U.S. Safety Eric Han told Axios at an event Tuesday the platform's new community guidelines, updated Tuesday, aim to "support the well-being of our community" beyond cracking down on hoaxes on the app. 

The big picture: The updated guidelines expand TikTok's "dangerous acts and challenges" policy to ban content that promotes harmful hoaxes. Viral challenges on the app have led to school shooting threats and students vandalizing schools.

TikTok also said it's adding clarity on the types of hateful ideologies and practices that are banned, including deadnaming, misgendering and misogyny, and content that promotes conversion therapy programs.

The new policy bans "any content that promotes dangerous behaviors," Han said. "So part of that is expanding the type of content related to eating disorders that we will remove." 

"So for instance, instead of strictly removing content that is traditionally seen as eating disorder content, we'll also begin to remove disordered eating content. So that means think about extreme calorie counting or content promoting what might be seen as over-exercise."

Han said teams work to quickly remove content that could be harmful.

"If you search for something that we've determined is a dangerous challenge, you won't find content around that," Han said. "We're also working to educate people around online challenges and steps they can take to assess viral warnings, including hoaxes. "

Go deeper: TikTok updates rules to combat viral hoaxes

TikTok safety chief: Policy update aims to support "well-being of our community"

Viral TikTok challenges have led to school shooting threats and school vandalizations.

Head of U.S. Safety for TikTok, Eric Han, speaking with Axios' Sara Fischer. 

Axios event

Axios Events

Media Trends

Axios Media Trends

TikTok on Tuesday said it's updating its policies to prevent harmful hoaxes from spreading on its platform. 

Why it matters: Viral TikTok challenges last year led to school shooting threats and students vandalizing schools.

Details: In an update to its community guidelines posted Tuesday, the tech giant said it will be strengthening its "dangerous acts and challenges" policy to prohibit content that promotes harmful hoaxes. 

TikTok will also be highlighting a separate policy category within its rules to creators to provide more details about which type of hoaxes violate its rules.

In addition, TikTok said it would be adding more clarity on the types of hateful ideologies and practices prohibited on its platform, including deadnaming, misgendering and misogyny, as well as content that promotes conversion therapy programs.

The big picture: TikTok says it works with experts and law enforcement to evaluate dangerous content on its platform and stop it from spreading. But users have proven adept at dodging some of TikTok's guardrails — and, given its scale, it can't always catch violating posts before they go viral. 

On Tuesday, the company said it removed 91 million videos in the third quarter of 2021, most of which (85%) were removed before a video received any views.

Worth noting: TikTok Head of U.S. Safety Eric Han told Axios at an event Tuesday the new rules aim to "support the well-being of our community" beyond cracking down on hoaxes.

Editor's note: This post was updated to include comment by TikTok Head of U.S. Safety Eric Han.

TikTok updates rules to combat viral hoaxes

The popular video platform also sharpened its definitions of different hate speech categories.

Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images

TikTok

Amazon will raise its maximum base pay for corporate and tech workers to $350,000 from $160,000, Geekwire reports.

Why it matters: The move is intended to bring Amazon in line with competitors like Google, Facebook, Apple and Microsoft, and to help ensure the company retains employees and recruits top talent.

The war for tech talent has seen average tech salaries exceeding six figures for the first time last year, according to a recent study by jobs platform Dice.

What they're saying: “This past year has seen a particularly competitive labor market and in doing a thorough analysis of various options, weighing the economics of our business and the need to remain competitive for attracting and retaining top talent, we decided to make meaningfully bigger increases to our compensation levels than we do in a typical year,” Amazon wrote in an internal memo to employees obtained by Geekwire.

The company said it plans to increase "overall compensation ranges for most jobs globally, and the increases are much more considerable than we’ve done in the past.”

The company said changes to base pay caps and compensation ranges will "affect every employee differently."

Amazon raises base salary cap to $350,000 for corporate, tech workers

The move is intended to help ensure the company retains employees and recruits top talent.

The logo of Amazon, (Amazon.com, Inc., listed US online mail order company), at the shipping warehouse in Kiekebusch, a district of the municipality of Schönefeld in the district of Dahme-Spreewald

Photo: Patrick Pleul/picture alliance via Getty Images

Amazon

Amazon on Thursday said it made more than $31 billion in advertising last year, a huge feat for the tech giant, which for years kept the size of its budding ad empire under wraps. 

Why it matters: Amazon has one of the fastest-growing advertising businesses in the world. It now makes more money than Microsoft, Snapchat and Twitter combined on advertising annually.

Catch up quick: Amazon first began taking its ad business seriously around 10 years ago when it launched its first ad exchange. Its business has grown significantly in the past four years, amid renewed investments in its strategy. 

Be smart: While analysts have long suspected Amazon's ad business was massive, they haven't been able to say with certainty exactly how big it was, until now. 

Amazon broke out its advertising revenue for the first time in its quarterly earnings report Thursday. It previously reported its ad revenue as a part of a wider segment labeled "other."

By the numbers: Amazon made nearly $9.7 billion in advertising in the fourth quarter of 2021, likely boosted by the holiday shopping rush. The company said it had its biggest-ever Black Friday to Cyber Monday holiday shopping weekend ever last year. 

Yes, but: While Amazon's ad business is huge, it's only a tiny fraction of its overall business, which includes e-commerce and cloud. Its ad business made up around 7% of its $137.4 billion in revenue last quarter. 

How it works: Amazon sells many different ad units, including video ads and banner ads. But the bulk of its ad revenue comes from sponsored product ads that appear at the top of search results.

Because Amazon's ad business is tied to search and not social media, it's not as vulnerable to Apple's privacy changes that are having a big impact on Facebook's ad business. 

Amazon's biggest risk to its ad business is the economy and its own e-commerce growth. Because its ads are mostly sold to its own retailers, looking to better boost their products in Amazon's search results, its ad business is directly tied to the health of those businesses and its e-commerce platform. 

Go deeper: Jeff Bezos hated ads — now Amazon is America's top advertiser

Amazon finally reveals the size of its massive ad business

The company for years kept the size of its budding ad empire under wraps.

Photo: Artur Widak/NurPhoto via Getty Images

Snap Inc.'s stock jumped more than 50% in after-hours trading Thursday after the tech giant posted its first-ever quarterly net profit as a public company, while also beating Wall Street estimates on revenue and user growth. 

Why it matters: Snapchat's massive beat stands in stark contract to Facebook, which lost more than $200 billion in market value yesterday after reporting weak first quarter guidance, attributable in part to changes to Apple's privacy policies, impacting Facebook's ad business.

Details: The self-proclaimed "camera company" touted new investments in its augmented reality products and content partnerships. Those investments contributed to higher user engagement in some areas. 

For example, the number of users of its TikTok competitive feature, "Spotlight," that subscribed to a creator on the platform more than doubled relative to the prior quarter, the company said. 

Snap said it added 160 new international channels for its premium content platform called "Discover." 

“The strength of our core business has enabled us to accelerate our investments in augmented reality, transforming the way that the Snapchat community experiences the world through our camera,” said CEO Evan Spiegel in a statement.

Earnings per share: 22 cents, adjusted vs 10 cents expected, according to a Refinitiv survey of analysts

Revenue: $1.3 billion vs $1.2 billion, according to Refinitv

Global Daily Active Daily Users (DAUs): 319 million vs 316.9 million, according to StreetAccount

Average Revenue per User (ARPU): $4.06 vs $3.79, according to StreetAccount

What to watch: Snap says it expects to make over $1 billion in revenue this quarter, up 33% from the first quarter of 2021. It also anticipates breaking even in the first quarter. 

Snap stock soars on earnings beat, quarterly profit milestone

Snapchat's beat stands in stark contract to Facebook, which lost more than $200 billion in market value yesterday.

Snapchat "ghost" next to an upward financial chart.

Snap Inc.

A bill that would upend how Apple and Google run their mobile app stores easily made it out of the Senate Judiciary Committee on Thursday.

Driving the news: Senators on the committee voted to pass the Open App Markets Act 20-2, with Sen. John Cornyn (R-Texas) and Sen. Thom Tillis (R-NC) voting no.

If the bill passes the full Senate and is signed by President Biden, Google and Apple would essentially have to give up full control of their app stores. 

New rules could require them both to allow app side-loading — installing apps from non-sanctioned marketplaces — and alternative payment processing systems. Apple and Google have argued vehemently against the bill.

Axios is told Sen. Tillis’ staff made a proxy vote for him in support of the bill, which was later reversed.

Why it matters: The 20-2 vote shows there's increasing support in Congress for the kinds of bills that aim to reel in Big Tech companies. 

It will still be a long haul for this bill to become law, but it's notable that it made it out of committee so easily, garnering the support of many Republicans.

Another tech antitrust bill, the American Innovation and Competition Act, made it out of the Senate Judiciary Committee by a 16-6 vote last month. 

What they're saying: A number of senators proposed amendments to the bill and suggested it needed more work.

Cornyn said he was worried about the bill allowing for cybersecurity risks and malware.

Sen. Amy Klobuchar (D-Minn.), a co-author of the bill along with Sens. Richard Blumenthal (D-Conn.) and Marsha Blackburn (R-Tenn.), dismissed tech company claims that the bill would cause privacy and security problems.

Blumenthal said tech companies "own the rails," comparing them to railroad monopolists from the past. "Gatekeeper dominance allows them to dictate the terms of the market."

Editor's note: This story has been updated to reflect the changed vote from Sen. Thom Tillis.

App store bill sails out of Senate Judiciary Committee

The 21-1 vote shows there's increasing support in Congress to reel in Big Tech companies.

Senators Marsha Blackburn and Richard Blumenthal at a desk on Capitol Hill

Sen. Richard Blumenthal (D-Conn.) speaks alongside Sen. Marsha Blackburn (R-Tenn.) during a Senate Commerce, Science and Transportation subcommittee on Consumer Protection, Product Safety and Data Security hearing. Photo: Anna Moneymaker/Getty Images

Senate Judiciary Committee

Shares for Meta, Facebook's parent company were down roughly 20% in after-hours trading on Wednesday in response to weak earnings and growth forecasts. Most notably, the daily active user count for Facebook declined by roughly 1 million compared to last quarter.  

Why it matters: The earnings miss proves the vulnerability of its business model being tied to advertising against social networking, as opposed to search. 

It also shows how much the company is being impacted by competitors like TikTok. 

Be smart: Google parent Alphabet posted a huge earnings beat Tuesday, mostly tied to growth of search-based advertising, as well as advertising on YouTube.

Facebook's ad model makes it uniquely vulnerable to privacy changes made by competitors like Apple. 

Details: In a statement, the company said revenue growth for the first quarter could be as low as 3%. It said it expects its year-over-year growth in the first quarter "to be impacted by headwinds to both impression and price growth."

It expects "continued headwinds" from increased competition for people's time and "a shift of engagement" within its apps towards video products like Reels, which are harder to monetize compared to other video products in the News Feed and in Stories (strings of video and text.)

It also anticipates modest headwinds from "platform and regulatory changes," like the changes to Apple's app tracking privacy features. 

What to watch: The company for the first time broke out numbers for its AR/VR segment called "Reality Labs," which includes augmented and virtual reality related consumer hardware, software and content.

The company said it made over $2 billion from its Reality Labs segment in 2021. 

The company warned last year that investments in Facebook Reality Labs would reduce its overall operating profit by roughly $10 billion in 2021.

Earnings per share: $3.67 vs $3.84 expected by Refinitiv

Revenue: $33.67 billion vs $33.4 billion expected by Refinitiv

Daily Active Users (DAUs): 1.93 billion vs 1.95 billion expected, per StreetAccount

Monthly Active Users (MAUs): 2.91 billion vs 2.95 billion expected, per StreetAccount

Average Revenue per User (ARPU): $11.38 expected, per StreetAccount

Meta stock plunges in response to weak growth forecasts

Shares for Facebook's parent company were down more than 20% in after-hours trading on Wednesday.

Photo Illustration by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images

Facebook

Axios AM

Meta will reinstate former President Trump's Facebook and Instagram accounts "in coming weeks" following a two-year suspension, according to Nick Clegg, the company's president, global affairs.

Why it matters: The decision sets a new precedent for how the company treats world leaders, and it could change the trajectory of the 2024 U.S. presidential election.

"We've always believed that Americans should be able to hear from the people who want to lead the country," Clegg told Axios. "We don't want to stand in the way of that."

Flashback: Facebook, along with Twitter and many other social media platforms, barred Trump soon after the Jan. 6 attack on the U.S. Capitol for breaking their rules and over fears of further incitements to violence. 

The big picture: The reinstatement of Trump's accounts will allow him to run ads via his Facebook and Instagram pages, which have 34 million and 23 million followers, respectively.

Trump relied heavily on Facebook ads in previous election cycles for fundraising and list-building. 

Under Elon Musk, Twitter has also reinstated Trump's account, but he has not posted yet, continuing to rely on his account at Truth Social instead.

Yes, but: Trump will be subject to new policies that Meta has created following feedback from its independent Oversight Board that could restrict his accounts — including his ability to run ads — should he violate the company's policies in the future.

"We just do not want — if he is to return to our services — for him to do what he did on January 6, which is to use our services to delegitimize the 2024 election, much as he sought to discredit the 2020 election," Clegg said. 

His accounts will not be reinstated immediately, Clegg said, because Meta's engineers will need time to build out some of the new functionality necessary to restrict certain posts or ad capabilities in the future, if needed. 

How it works: Trump will be subject to new policies around restricting accounts by public figures during civil unrest. Under those policies, Meta can decide to restrict the account of a public figure that violates its community standards for a time ranging from one month to two years.

Trump will also be subject to a crisis policy protocol, introduced by Meta in August, that will consider both on and off-platform risks of imminent harm to evaluating whether the actions or speech of any public figures requires sanctioning.

"If he now posts further violating content, that content will be removed, of course, and he could be suspended for between one month and two years, depending on the severity of the violation," Clegg said.

Be smart: For actions or speech that don't explicitly violate Meta's community standards, Clegg said the company will retain discretion to take action, and may enforce different types of guardrails, including limiting the distribution of posts without removing them or temporarily restricting access to its advertising tools.

"Oblique references to QAnon content, for instance ... is the kind of material that — even if it's done obliquely, and doesn't violate our community standards — we would seek to restrict the distribution of the content and/or restrict his ability to advertise," he said. 

These steps would allow content to remain visible on Trump's account but not get distributed in users' feeds, even for those that follow the former president.

For example, Meta may opt to remove the "re-share" button from such posts, and may stop them from being recommended or run as ads. 

Of note: If Trump posts content that violates the company's standards, but falls within Meta's characterization of "newsworthy content" — meaning the public interest in understanding what Trump said outweighs any potential harm — the company may opt to restrict the distribution of the content but leave it up. 

What they're saying: After Axios reported the news of Facebook's decision, Trump, in a post at Truth Social, said, "FACEBOOK, which has lost Billions of Dollars in value since 'deplatforming' your favorite President, me, has just announced that they are reinstating my account. Such a thing should never again happen to a sitting President..."

Between the lines: Clegg said Meta did not speak with Trump or any of his associates leading up to the decision being made and has no insight as to whether he plans to use his accounts once reinstated.

"We saw that his team had written to us publicly — I think they were asking for a meeting with Mark and myself and Joel [Kaplan]. That meeting did not take place," Clegg said, referring to Meta chief executive Mark Zuckerberg and Meta vice president for U.S. public policy Joel Kaplan. 

Trump was not briefed on the decision to lift his suspension before it was made public, Clegg said. He noted that the company will "always make ourselves available to explain and emphasize the policies that we've laid out."

Exclusive: Facebook to reinstate Trump

The decision will end a two-year ban and allow Trump to post and raise money using the platforms.

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