The FTC’s lawyer wants to know more about partial foreclosure affecting competition.
FTC: Can partial foreclosure harm consumers?
Dr. Lee: Like exclusivity, it can be both pro and anti-competitive effects
FTC: Do you think that partial foreclosure can affect competition?
Dr. Lee: Yes
The FTC moves on to Call of Duty on Xbox and PC, and Judge Corley intervenes again and wants to know why wouldn’t people simply switch to a PC where they could play their games and get more value out of a PC to do productivity work and more.
Judge Corley: The Xbox Series S pricing is closer to the Switch, does it compete with the Switch?
Dr. Lee: There’s the Series X and PS5 and the Series S is still in that market. So if you’re thinking about a price increase on the Series X, the customers who buy the X console, they are more likely to switch to the PlayStation 5 or to a Switch? So this decides the market definition, evaluate a price increase on any of the products in the market.
Dr. Lee argues that he models and provides evidence that around 10-15 percent of folk who leave an Xbox would to go PlayStation or vice versa and that a “hypothetical monopolist... would find a five percent price increase, likely profitable.”