FTC is suing to block Microsoft’s merger with Activision Blizzard

The Federal Trade Commission has filed an antitrust suit seeking to block Microsoft’s planned $68.7 billion acquisition of Activision Blizzard. The FTC began investigating the deal and its potential impact on the video game market shortly after it was announced in January. Apparently the agency was concerned enough to try to slow down the buyout. The FTC said that, if the deal goes through, it would “allow Microsoft to stifle competitors from its Xbox gaming consoles and its burgeoning subscription content and cloud gaming business.”

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a press release. “Today we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

The FTC commissioners voted in favor of the lawsuit along party lines, and the three Democratic members approved it. Lone Republican Commissioner Christine S. Wilson voted against the lawsuit in a closed session.

“The FTC pointed to Microsoft’s record of acquiring and using valuable game content to suppress competition from rival consoles, including its acquisition of ZeniMax, the parent company of Bethesda Softworks (a well-known game developer),” the agency said in a statement. a press release. “Microsoft has decided to make several titles from Bethesda, including Star field and redfall Excluding Microsoft despite assurances it had given European antitrust authorities it had no reason to withhold games from rival consoles.”

While the lawsuit won’t necessarily end the deal, it’s unlikely to be resolved by July Politics, who had reported that an FTC bid to block the merger was likely, recently noted. That was the deadline set by Microsoft and Activision for closing the deal. If the acquisition is not completed by then, the companies will have to renegotiate the agreement or even abandon the merger. Regulators in other jurisdictions have been scrutinizing the deal, including in the UK and the European Union (which should complete its investigation by the end of March).

Sony is the most prominent opponent of the merger. It has expressed concern that Microsoft would make games like Call of Duty exclusive to Xbox platforms, which could cost Sony hundreds of millions of dollars a year. However, Microsoft has said it wants to keep Call of Duty on PlayStation and claims to have offered Sony a 10-year deal to do so.

Just before the FTC vote, Microsoft said it had struck a deal with Nintendo to bring Call of Duty games to the company’s systems if the merger is finalized. Call of Duty will also remain on Steam as part of a separate pact with Valve.

Microsoft and Activision downplayed the significance of the deal in an effort to appease and push through regulators. To begin with, Microsoft has claimed that Sony has more exclusive games, “many of which are of better quality”, in a filing with the UK’s Competition and Markets Authority (CMA). It also said Activision Blizzard doesn’t have “must-have” games, despite having some of the most popular titles in the world (including Call of Duty: Modern Warfare II, Overwatch 2 and World of Warcraft) under his umbrella.

The FTC refuted those suggestions in its complaint. The agency claimed that Activision is “one of the few top video game developers in the world creating and publishing high quality video games for multiple devices”. It noted that among franchises such as Call of Duty, World of Warcraft, Diablo, and Overwatch, Activision has more than 154 million monthly active users.

Microsoft has suggested that the deal acquisition is more about gaining a foothold in the mobile gaming market, where Activision’s King division is a major player. For example, Candy Crush Saga has had over 3 billion downloads.

Ultimately, the FTC believes the merger is likely to harm competition in the video game market. “With control of Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s prices, degrading Activision’s game quality or the player experience on rival consoles and game services, change the terms and timing of access to Activision’s content, or completely withhold content from competitors, resulting in harm to consumers,” the agency said.

Engadget has reached out to Microsoft and Activision Blizzard for comment.

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