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Last month, we heard reports that Microsoft’s proposed acquisition of Activision Blizzard could hit a major hurdle in the form of an antitrust lawsuit from the US Federal Trade Commission, and now, that’s exactly what happened. The FTC is looking to block the proposed $69 billion Microsoft-Activision deal, alleging it would “enable Microsoft to suppress competitors to its Xbox game consoles, rapidly growing subscription content and cloud gaming business.” In its press release, the FTC cites Microsoft’s treatment of Bethesda and its franchises, which become exclusive to Xbox, as one of the main reasons why they blocked the Activision deal. That’s the entire rationale for the FTC to file an antitrust suit…
The Federal Trade Commission is seeking to prevent tech giant Microsoft from acquiring Activision Blizzard, Inc., a leading video game developer in the video game industry. It would enable Microsoft to suppress competitors to its Xbox game consoles, rapidly growing subscription content and cloud gaming business.
In a complaint issued today, the FTC cited Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, the parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several Bethesda titles including Starfield and Redfall Microsoft exclusives despite assurances it gave European antitrust authorities that it had no incentive to withhold games from competing consoles.
Microsoft’s Xbox Series S and Series X are just one of two types of high-performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a high-end cloud-based video game streaming service, according to the complaint.
Activision is one of the very few top video game developers in the world that creates and publishes quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video games, including Call of Duty, World of Warcraft, Diablo and Overwatch, and has a total of 154 million monthly active users worldwide, according to the FTC complaint. Activision currently has a strategy of offering its games on multiple devices regardless of the product.
But that could change if the deal is allowed to move forward. By controlling Activision’s blockbuster franchises, Microsoft will have the means and motive to harm the competition by manipulating Activision’s pricing, impairing the quality of Activision’s games or player experience on competing consoles and game services, changing the terms and timing of access to Activision content, or blocking content from competitors, harming consumers.
While Microsoft has yet to officially respond to the FTC’s lawsuit, Activision Blizzard COO Lulu Cheng Meservey had the following to say.
This vote breaks precedent, but the law has not changed. Any claim that the deal is non-competitive ignores the facts; The deal benefits the players and the industry, especially in light of the competition from abroad.
We look forward to proving our case in court and closing our deal with Microsoft
– Lulu Cheng Meservey (@lulumeservey) December 8, 2022
Activision Blizzard has faced a series of lawsuits and other legal actions in the wake of a lawsuit brought by the California Department of Fair Employment and Housing (DFEH) alleging widespread gender discrimination and sexual harassment at the Call of Duty publisher. You can get more details about that unfolding story here.
what do you think? Does the FTC have a case? Is the Activision Blizzard buy cooked?