Now in its fourth year, it’s fair to call the list of ‘antitrust books you should’ve read last year’ a tradition (see the 2019, 2020 and 2021 editions). After three years of unusually full publication calendars, 2022 saw antitrust publishing slow down just a bit. But I’ve always compiled these lists based on the idea that the best antitrust books do not have to concern antitrust—at least not directly, so there were still plenty of candidates.
In this first instalment, I focus on two books that relate to antitrust’s hottest market: gaming. The European Commission is readying its statement of objections to Microsoft/Activision-Blizzard (arguably the largest tech acquisition ever), the appellate trial in Epic v Apple has been building, and the Competition & Markets Authority is investigating the cloud gaming market—to name a few of the developments. The Metaverse by Matthew Ball and Influence Empire by Lulu Yilun Chen provide the background needed to make sense of it all.
‘The Metaverse—and How It Will Revolutionize Everything’ by Matthew Ball
In short: In 2022, the metaverse went mainstream. Thirty years after Neal Stephenson coined the term in his novel Snow Crash, it almost become Oxford Dictionary’s word of the year, losing out only to ‘goblin mode’. Matthew Ball was able to time the publication of his book remarkably well thanks to both his background and previous work. As a former global head of strategy for Amazon Studios, he deeply understands computing (and as a venture capitalist, he is also sensitive to issues of competition). And for the writing, Ball was able to rely on a series of influential essays he published previously. As a result, the book shows no signs of haste.
When the metaverse—‘a successor to the mobile internet’ (p. 60)—arrives, it will owe much to the virtual words that have preceded it. These ‘proto-metaverses’ include games like Minecraft (by Microsoft), Roblox, and Fortnite (by Epic Games). The CEO and founder of Epic, Tim Sweeney, says they’ve ‘had metaverse aspirations for a very, very long time … but only in recent years have a critical mass of working pieces started coming together rapidly.’ (p. 19) The road ahead is long though: a functional metaverse still requires significant advances in networking, computing, virtual world engines, and hardware (chapters 5–7 and 8). The metaverse can also follow different development trajectories. Will it be open and interoperable, like the internet, or will it be closed and monopolized, like some of the platforms built on the internet? Ball is optimistic that economics will drive interoperability (chapter 9), but competition law may also have a role to play.
Favourite chapter: Chapter 10 on ‘Payment Rails’ is the book’s longest. Ball himself noted that ‘some find dull, long, and too tangential’, but competition lawyers will disagree. The chapter assesses whether and how Apple’s policies (a 30% App Store fee and ban on competing app stores) ‘outlaw the metaverse’ (pp. 22 and 184). That phrasing is borrowed from Sweeney, who is battling the restrictions in its cases against Apple. Ball is sympathetic to Sweeney’s cause, given how Apple’s policies (i) stifle investment in the metaverse and adversely affect relevant business models (that may have to contort themselves around the fee); (ii) cramp the margins of metaverse pioneers (who may not have 30% margin to spare); and (iii) effectively prohibit metaverse-focused technologies (e.g., cloud gaming) from further development.
Quotable: Given how nebulous the metaverse concept is, Ball does us a service by coming up with a definition, which is worth quoting in full: ‘A massively scaled an interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.’ (p. 28). That’s quite the mouthful, but Ball goes dissects every component of that definition in chapter 3 of the book.
Further reading: As Ball writes, ‘The concept, history, and future of the Metaverse are all intimately tied to gaming’ (p. 105). If you need a primer on the industry, go read Joost Van Dreunen’s One Up, which I recommended last year. Those with an interest in Apple may want to pick up After Steve, Tripp Mickle’s account of how the company became ‘increasingly devoted more to margins than to inspiration’.
‘Influence Empire: The Story of Tencent & China’s Tech Ambition’ by Lulu Yilun Chen
In short: The ten largest firms by market cap hail mostly from the U.S. but include one Chinese company: Tencent. Placing 9th, this firm has overtaken Facebook (currently 20th). Even though Tencent is sometimes described as ‘the Facebook of China’, that description does not do it justice. Its main product, WeChat, does not only facilitate communication but also food delivery, ride-hailing, payments, online shopping, music streaming, and much more. It is the ‘super app’ that Western tech companies dream of. In her book Influence Empire, Lulu Yilun Chen gives Tencent the treatment it deserves, using the subject to tell a deeper story of Chinese tech competition (more cut-throat than in the U.S.) and regulation (harsher than in the EU).
From its inception, Tencent ‘had no qualms about ripping off concepts from competitors’, and then relying on its significant traffic to win out against them (pp. 36–37). The alternative was acquisition, with startups dubbing a bid from Tencent ‘an offer they can’t refuse’ (p. 101). Over the years, however, Tencent started taking a more collaborative approach, investing in startups and ‘becoming an incubator … instead of a killer’ (pp. 42–43). Competition with arch-nemesis Alibaba has left a series of battlefields—payments, ride-hailing, food delivery—strewn with corpses (chapters 5, 6 and 8). But more recently, the most daunting antagonist has proven to be the State (chapter 11). Chinese regulators have torpedoed the IPO of Ant Group, forced Didi to delist from the New York Stock Exchange, and fined Alibaba $2.8B for antitrust violations. Tencent has steered relatively clear from antitrust action, but China’s amended Anti-Monopoly Law and Platform Guidelines loom.
Favourite chapter(s): Though not initially a gaming company, gaming played a major role in Tencent’s development—a story told in chapters 9–10. Today, it is by far the largest gaming company in the world, with a variety of revenue streams. For one, Tencent acts as a publisher for Western games in China. When it comes to game development, its original offering was less-than-original. Over time, however, it has established itself as a bona fide creator, especially in mobile (with games like Honour of Kings). It also made broad investments in developers like Riot and Supercell. Through its 40% stake in Epic, Tencent is indirectly involved in the App Store battle. It’s also interesting how Tencent hosts ‘mini-programs’ (essentially apps) in apparent infringement of Apple’s ban on competing app stores, although Apple has been looking the other way for now.
Quotable: After a competing game developer accused Tencent of blatantly ripping off its operation and business model, the competitor sued for copyright infringement and improper competition. The court ruled in favour of Tencent though, after which its CEO Pony Ma put his philosophy into words: ‘I don’t blindly innovate. Microsoft, Google are both doing what others have been doing. The smartest approach is to learn from the best examples and then try to surpass them.’ (p. 137)
Further reading: To understand China’s broader regulatory system, Angela Zhang’s Chinese Antitrust Exceptionalism is a must-read (as I wrote last year). Influence Empire’s last chapter addresses the metaverse, nicely linking the book to Ball’s (discussed just above).
Expect the second instalment of ‘antitrust books you should’ve read in 2022’ soon!
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