FTC Sues to Block Microsoft Acquisition of Activision Blizzard
08/12/2022 à 19:02
In a 3-to-1 vote, the Federal Trade Commission has
approved a lawsuit
intended to block Microsoft's proposed $69 billion acquisition of Activision Blizzard, citing potential harm to consumers due to concerns of exclusivity. With this, the case will now be heard before a federal judge, who will hear arguments from both sides before making a final decision to block or allow the merger.
Federal Trade Commission
The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.
In a complaint issued today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Microsoft’s Xbox Series S and Series X are one of only 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 cutting-edge cloud-based video game streaming service, according to the complaint.
Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has millions of monthly active users around the world, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.
But that could change if the deal is allowed to proceed. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.
The Commission vote to issue the complaint was 3-1, with Commissioner Christine S. Wilson voting no. A copy of the administrative complaint will be available shortly.
Response has been explosive, with the
New York Times
called it one of the most aggressive actions taken by federal regulators in decades, while
made a point of referencing Microsoft's recent efforts to offer concessions to both competitors as well as their own employees efforts to unionize.
New York Times
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the F.T.C.’s Bureau of Competition, in a statement. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Activision Blizzard CEO Bobby Kotick
released his own statement
in response to the news, reminding readers that this isn't the end of the deal - the case will now go to court and arguments from both sides will be heard by a judge before a final decision is rendered. He further expressed his continued confidence that the deal will close.
Senior Vice President of LItigation, Regulatory, and Public Policy Law at Activision Blizzard Jeb Boatman
expanded further in a post on substack
, opposing the FTC's arguments, stating rumors that Microsoft would make Call of Duty exclusive to Xbox are nonsense, and would not make good business sense - losing billions in sale revenue and infuriating console owners for no good reason, further citing Microsoft's recent promise of a
to bring Call of Duty to Nintendo as evidence against plans for exclusivity.
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