Because acquisitions make markets less competitive, not more. There are a zillion US companies making games, and if the platform gatekeepers become an issue, then the US can force them to open up their platforms and quit their rent-seeking.
This is just simply not true as a blanket rule.
Also, I don't understand what you're saying. Activision is not in the console market, only Microsoft is. Buying Activision makes the console market more competitive because it makes Microsoft's console more compelling in that market, a market where they are floundering.
You could also look at the game market, which as you say has a zillion US companies making games, and Activision under Microsoft would have to continue to compete in that market.
How does this reduce competition, and in what market?
It is, which is why the FTC needs to approve mergers.
> Buying Activision makes the console market more competitive
Why should the FTC care about the console market specifically rather than the gaming market in general?
> How does this reduce competition, and in what market?
The very notion of "console exclusives" reduces competition because it removes incentives to compete on hardware cost or quality and instead compete only on whatever IPs a company happens to own.
It isn't, which is why the FTC often approves mergers.
> Why should the FTC care about the console market specifically rather than the gaming market in general?
They should consider both.
> The very notion of "console exclusives" reduces competition because it removes incentives to compete on hardware cost or quality and instead compete only on whatever IPs a company happens to own.
Why is competing on hardware cost or quality more valid than competing on exclusive content? And if that's the rule, why is the company with better exclusive content, Sony, allowed to acquire more studios, like Bungie?
Both are 1) buying a game making company, 2) making a game, 3) withholding it from the competition.
There doesn't seem to be many examples of them buying studios to take existing cross platform megahits exclusive.
Edit: They apparently bought Bungie recently? Wikipedia kinda doesn't include it in their list of PlayStation studios in a normal fashion so I missed it. I suppose that is buying a big IP in Destiny (in reaction to the MS-AB takeover?), although that's basically a 1 game studio (next to no-one is really going to care about Myth or Marathon), so it's still a fair bit smaller than the sort of stuff proposed with MS and A-B.
Many may not like it but it is not about what is fair, but what keeps the market healthy.
But windows gaming isn't like console gaming. You don't have to pay license fees to microsoft to publish on windows - its a general purpose platform thats relatively open. It has nothing to do with the console market for you to count it except to purposely misrepresent the market.
It would make Microsoft more competitive/powerful