This week’s court battle involving Microsoft and Activision, giants of tech and gaming, reflects a sea change under way in America’s trustbusting machinery; it may not go as far as the top competition cop might like. A boom in China’s post-pandemic economy now seems to be sputtering (11:29). And a paean to the Tayto crisp—cheese-and-onion flavour, naturally (18:29).
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Hello and welcome to the Intelligence from The Economist.

Every weekday we provide a fresh perspective on the events shaping your world.

China was 1 of the last countries to abandon pandemic lockdowns, and investors and analysts alike were waiting anxiously for its recovery.

The comeback came, but things aren't going quite the way that many expected.

And what's the best possible fate for a potato?

Our correspondent argues passionately that the answer is a crisp, a potato chip.

And not just any crisp, a particular flavour of a particular Irish brand.

A pitched battle is playing out in an American court this week.

That's the trailer for a wildly popular video game named Call of Duty, perhaps the shoot-em-up game of all time.

It's raked in billions of dollars for its maker, Activision Blizzard, a gaming goliath that Microsoft, the tech giant behind Xbox consoles, is keen to buy.

The FTC has asked for a temporary restraining order to block the $69 billion merger.

The battle between the FTC and Microsoft rolls on.

So this really could have big implications as to the future of this acquisition.

American trust busters don't want the deal to go through and are making their final arguments today.

It's far from the only deal that the competition cops are getting in the way of.

Mergers involving Amazon, Google, and lots of others are now gummed up in court.

That is in large part because of 1 woman, Lena Kahn, the youngest ever head of the Federal Trade Commission, or FTC.

There are very, very tangible, concrete harms that we are already living with because of significant consolidation and concentration.

And what I worry about is whether we're doing enough to fully enforce the laws and protect Americans.

Khan isn't just aggressively going after big business, trying to stop big deals.

She's trying to change the way America's antitrust machinery thinks about those deals.

Whether she and like-minded colleagues can alter the government's bureaucracy on business, though, is still an open question.

There are radically different perceptions of Lena Kahn, depending on who you ask.

Alexander Suwicz-Bass is our senior correspondent for Politics, Technology, and Society.

To progressives, Lena Kahn is viewed as a heroine, bravely scrutinizing corporate conduct and taking on big tech.

To corporate America, it's a very different view.

She's seen as a villain, pushing overly boisterous and partisan approach to merger enforcement.

But whatever your view, she is really shaking up corporate America and how mergers and antitrust are viewed in the public.

And before we get into that, tell me a bit about her and how she ended up in that position.

Lena Kahn rose to prominence while she was a student at Yale Law School.

She wrote an article called Amazon's Antitrust Paradox that got a lot of attention in the field of antitrust.

She was arguing that people have been asleep at the switch and view antitrust and monopolization into narrow of terms.

She got the attention of Elizabeth Warren, the Democratic Senator from Massachusetts who pushed the Biden administration to appoint her to the FTC, originally as a commissioner, and then she was elevated to chair.

Her counterpart at the Department of Justice is Jonathan Cantor, who previously worked for Google but then became a vocal critic of big tech.

And together, along with Tim Wu, who used to be at the White House, there has really been a team of trust busters who are trying to take a much more activist approach to taking on big companies and squashing potential deals.

And so what does that approach look like in practice?

Their goal is to push beyond the consumer welfare standard, which looks primarily at prices.

And instead, they're trying to take a broader look at harm in the economy.

So that would include harm to labor or small businesses.

Their argument is that this was actually how antitrust used to be.

They're wanting to return it to its roots.

And the period we've seen more recently, they argue, since the Reagan administration has been narrowly too focused on consumer pricing.

So they're trying to take a much more expansive view.

A few weeks ago, I sat down with her to find out more about her approach.

You know, be it the bankers that are financing deals, be it the lawyers that are trying to broker them, be it some of the executives that are looking to propose them.

They've all made clear that they recognize that there are cops on the beat, that these cops take their job extremely seriously.

They were vigorously looking to protect the American public from illegal mergers.

Lena Khan told me that the industry has really taken note of what they're trying to do.

But the reality is that they're taking a much more speculative approach to some cases.

And some people feel that the FTC and Department of Justice are bringing cases that are on somewhat shaky legal ground.

How are the cases that they're bringing working out?

It's been a very mixed picture, and there have been plenty of losses.

Supporters of Khan and Cantor's agenda think that by being more aggressive on enforcement, the threat of having law enforcement visible means that companies are acting better.

And so supporters point out that there's been some splashy dealmaking that hasn't happened or deals that were potentially anti-competitive that were dropped after the FTC raised concerns.

Total deal value for all mergers in America are down about 40% on the previous five-year average, which does suggest that some firms are avoiding larger acquisitions.

In court, the most significant victory has been the DOJ's challenge to Penguin Random House's proposed takeover of rival publisher Simon & Schuster for $2.1 billion.

But there have also been plenty of losses, and some have been sounding the alarm about those.

The most notable 1 occurred last year in July when the FTC challenged Meta's acquisition of Within, which was a small maker of virtual reality fitness apps.

Khan told me that this reflected her wider view on emerging tech markets and the threat to nascent competition.

And so we need to be very vigilant, especially when there are tech moments of technological transition that we are ensuring that competition is able to enter and we're not allowing the dominant firms to use these moments of technological transition to engage in unlawful acquisitions that snuff out the threats to their dominance.

But a judge rejected the FTC's request for an injunction.

And it's very important to note that the reality of trying to bring cases is very different than the theory of it.

And I think that's what Lena Kahn and Jonathan Cantor are finding.

Lena Khan rose to prominence talking about the threat to young upstarts and big tech gobbling them up.

But it seems like courts are not as willing to buy that argument.

A very important test to watch will be the FTC's lawsuit to block Microsoft's $69 billion acquisition of Activision for a second time.

Khan has argued that it could suppress competition in the video game market.

So winning the case could be a big milestone for the FTC, but another loss could set back her cause in the long term.

And what do you think's the dynamic behind that mixed record?

Is this just a resistance to someone coming in and trying to shake up the thinking behind these cases?

The first 1 I would point to is that sometimes the person who helps start the revolution is not always the best person to lead it.

Khan, while she's been extremely important intellectually in reframing thinking about antitrust, has been somewhat controversial as a leader at the FTC.

Morale has sunk at the FTC and coming in and telling people that the agency's been failing for the last 40 years has not really been a motivating force.

And because she has not been a legal practitioner before, it has caused a lot of skepticism, even among some of her supporters.

She has pushed the FTC to try to accomplish a lot through new rules, really stretching what the FTC has done in the past.

We're really going back to the original vision of the FTC as Congress envisioned it.

We're going back to the text of the statutes that we enforce.

But the courts in Congress may feel that the FTC is pushing its authority beyond what it's been given and could ultimately clip the wings of the FTC.

Another issue that the FTC and DOJ are encountering is that it's 1 thing to bring cases, it's another to win them.

And in order to win them, you have to have judges who agree with Your view of the law the Biden administration so far has prioritized more diversity in the judges that they have appointed rather than competition policy being a priority.

I guess that's also a sign though that 1 woman, 1 pair of lawyers can't change this huge system in 1 go.

Some of the big tech cases against Google could take years.

There's also a lot of uncertainty about technology, such as the rise of generative AI and how that will affect competition.

As Mark Warner, a Democratic senator, told me, it's way too early to say how all this will play out.

Biden isn't going to achieve as much as he wanted on antitrust before he leaves the White House.

But it is actually possible that we see a continuation of some of these cases and some of the thinking on antitrust.

Bashing big business has become much more of a bipartisan issue than it was.

The Republican Party has really changed its attitudes towards big companies.

And so it's possible on the campaign trail and during the Republican primary that we'll start hearing a lot more attacks on big business, and that may play into support for antitrust enforcement going forward, too.

This is no longer just an issue of Democrats taking on big companies.

Alexandra, thanks very much for your time.

With Asana, everything's in 1 place, so everyone can see how their work ladders up to larger goals.

Timelines keep projects on track, and automations keep the process streamlined, so your team can focus on the work and the goals that matter most.

For decades, economic growth in China seemed like an inevitability until, of course, the pandemic hit.

Under the government's harsh zero-Covid restrictions, people were forced to stay at home while businesses faltered and failed.

In January, those lockdowns finally ended.

And for a time, the economy came roaring back.

China's economy is rebounding after 3 years of widespread Covid-19 curbs.

China's latest quarterly growth figures are out and they're better than expected.

Even housing picked up, sales picked up for the first time in 20 months.

Now GDP growth came in at 4.5% in the first 3 months of the year.

Yet early indications show that after a strong first quarter, the long-awaited recovery has slowed.

To keep citizens spending, Beijing is stepping in.

Last week, the Chinese central bank cut interest rates, while the government announced a multi-billion dollar tax break for new green vehicles.

But while China's Premier Li Qiang sounded outright bullish at the World Economic Forum on Tuesday, his predictions of mountain growth may be overly optimistic.

So everybody thought China would come roaring back from 0 COVID earlier this year.

But across the board, things just aren't really happening the way that many expected.

Don Wineland is The Economist's China Business and Finance editor.

It's possible that between April and June, the economy won't really grow at all compared to the quarter before.

And everybody's watching the slowdown for what kind of impact it might have on the global economy.

Well, if you go back a couple months ago, really not very long ago at all, 6, 7 months ago, China was just emerging from 0 COVID, which was this policy that essentially shut down the economy in order to stop COVID from spreading.

Everyone expected that as the economy opened up and as China opened up to the world, that people would start spending money again.

We didn't see some of that earlier in the year, But it's really tapered off quite a bit as the year has progressed.

And it really doesn't matter where you're looking.

If it's retail spending or house purchasing or investment, all of these gauges on economic activity aren't doing very well.

It's quite a worrying sign for where the economy is headed this year.

And Don, what exactly is driving this change?

There's multiple problems, but 1 thing that everybody's talking about is the housing and real estate market.

This is a huge component of China's economic growth, anywhere between 25 and 30% of economic output.

And really, we're just not seeing enough activity in this area.

Prices in many cities across the country are still slowly going down.

And there's not a lot of construction activity happening.

And local governments aren't really selling enough land either.

Selling land is a really important part of local government revenue, and it's just really not happening right now.

And what's the government doing to slow the slide?

China's response to a lot of these problems over the past couple years has been relatively slow.

And that's the case with what we're seeing right now as well.

At first, we didn't really see much of a reaction from the government.

But very recently, we have seen signals from the central government that it's going to take action.

So 1 thing that's happened very recently is that the central bank has lowered interest rates.

The cut itself was very small, but again, it's a sign that the government understands that there's a problem.

We will probably see more interest rate cuts in the next couple weeks and months.

And Don, do you think that these interventions will be enough?

So as the central bank cuts interest rates, it's hoping that more people will want to borrow money at lower costs.

But you know, if you're a big company and you're thinking about expanding right now, and you know, getting loans to do that, this environment isn't the greatest time to expand.

As many economists say, you know, pushing on on a string, it's hard to get companies to borrow more money just by lowering interest rates.

Well, if lowering interest rates won't go far enough, then what?

There could be a fiscal component of the government's response.

So far, China has not done a whole lot of transfers to average people.

So the stimulus checks that people saw in America and many other countries, China didn't really do that across the board.

It's possible that they could experiment with that.

We have seen some small targeted stimulus programs like that in some cities, but they haven't really tried that across the board and they may very well try.

So this could come in the form of consumer giveaways.

They could give vouchers for spending specifically on food and dining.

This is something that helps create jobs later down the line.

If restaurants are doing well and they hire more people, that could have an impact on unemployment.

And Don, whichever way China goes, whether the slowdown continues or they manage to get it under control, what might this all mean for the world economy?

At the start of the year, there were concerns that a very strong economic rebound in China would drive up inflation globally.

The smaller rebound that we saw in the beginning of the year didn't really have an effect on global inflation.

This went against what many people were predicting.

And at this point, we're not really seeing much of an impact across the board on many different commodities.

So China's rebound has not prevented oil prices from dropping 10%.

Steel and copper prices have gotten cheaper.

At this point, the concerns over China driving up global inflation really haven't panned out.

So I guess if there's some silver lining in China's economic problems right now, it's that we're not seeing higher inflation around the world due to economic activity here.

And I'd say that's a welcome surprise for the global economy this year.

Don, thank you so much for coming on the show.

My earliest memories are always really good summers in Ireland, being taken to the beach and having a pack of Tato crisps with you.

My granddad and my great uncle used to buy us a 6 pack of Tato for me and my siblings on a Friday.

For a potato, there is no nobler fate than to end up in a packet of tato cheese and onion crisps.

Josie de Lapp writes World in a Dish, the Economist's column on food.

Tatoes are the consummate crisps or potato chips to our American listeners.

The company was established in Ireland in 1954 by someone called Joe Spud Murphy.

First of all, every kind of potato from County Meath arrives with the crisp factory and then unloaded into the stores.

He didn't invent crisps, they had existed for quite a long time before that, but he has been credited with transforming them.

Up until that point, bags of crisps came with a little packet of salt inside them that you sprinkled over the contents, closed the bag, shook it up and that was what gave it flavour.

This all changed after the Second World War, largely because of something called the gas chromatograph.

Food scientists could understand the chemical compounds that lie behind flavours, such as cheese and onions.

But these are cheese and onion crisps, so sprinkle a mixture of salt and onion and cheese to flavour them.

Which allowed them to then develop artificial flavours and that was an advance that Murphy seized upon.

They're on their way to the cellophane bag.

Tatoe, and he might not help much with the taste, but he definitely helps with the marketing.

the snack that has the knack for having the crack.

Seamus Heaney, who is 1 of Ireland's greatest poets, wrote that potatoes promise the taste of ground and root.

The less poetic might describe them as a bit bland, but when you sprinkle them with that salty, savory umami of Murphy's seasoning, they become a cut-price sensation.

I probably enjoy it the most after coming in from a walk on a soft rainy day.

There's something about the dampness in the air, and if I was walking along the Strat, and the salt in the air, that combination of the salt in the air, salt in the bag.

Some people might argue otherwise, but I would say that Tato's remain the quintessential Irish crisp.

Now, they are available in other countries, as of course are many other brands of flavoured crisps.

And thanks to a very globalised food system and the appetites of homesick migrants, you can buy Tato's and other snacks in countries that are far beyond their lands of origin.

For me, Tato Crisps just remind me of Ireland.

It's 1 of the first things you look for when you come home after being abroad, whether you're living away from home or being on holidays.

It might be even something you pack with you when you go on holidays.

You get home, you see a packet of Tato, you're reminded of everything, your holidays, Christmas, sentimental moments, parodies and stuff that just brings you back to memories of times.

I mean when you look at a plastic bag of crisps that could last for months, years, it seems like the antithesis of a seasonal or local food, the kinds of characteristics that are so often prized in foods today.

And yet for me, they're very much a snack that is entangled in my Irish family's roots.

I would eat them on a beach in South West Ireland as part of a picnic or, you know, after a freezing cold swim or at the top of a mountain.

That's not because I can't eat them anywhere else.

You can buy them in London, where I live.

You can order them online, albeit at something of a markup.

So I could have them on my lunch break in the office, but they just wouldn't taste quite the same.

There is somehow nothing quite like the taste of Tato's in the place that they come from.

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Antitrust, the process: America’s competition cops