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The FTC Wants To Block Microsoft's Acquisition Of Activision

by Marcus Stewart on Dec 08, 2022 at 04:01 PM

The Federal Trade Commission is looking to block Microsoft’s pending $69 billion acquisition of Activision Blizzard. 

According to a press release, the Commission, whose purpose is to protect consumers by promoting fair market competition, voted 3-1 to file a lawsuit to prevent the deal's closure. Thus, a federal judge will weigh in and make a decision. Among other reasons, the FTC cites Microsoft’s record of using previous acquisitions to “suppress competition from rival consoles" and points to the publisher's purchase of ZeniMax in 2020 as an example, stating: 

“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.”

The FTC adds that Activision is one of the few major third-party publishers left that offers several best-selling franchises on multiple platforms. It claims that if Microsoft’s acquisition is successful, it would have “the means and motive to harm competition.” The FTC lists hypothetical examples, including Microsoft potentially reducing the quality of non-Xbox versions of Activision games or services, withholding content from other platforms, and manipulating pricing in an anti-consumer manner

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Overwatch 2

“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.”

Activision CEO Bobby Kotick responded to the FTC's vote to sue in a message to staff, saying in part:

"The allegation that this deal is anti-competitive doesn't align with the facts, and we believe we’ll win this challenge." Kotick then adds, "...the competitive landscape is shifting, and, simply put, a combined Microsoft-ABK will be good for players, good for employees, good for competition and good for the industry. Our players want choice, and this gives them exactly that. We believe these arguments will win despite a regulatory environment focused on ideology and misconceptions about the tech industry."

So far, the Activision acquisition has been approved (with no regulatory concessions) by international government commerce bodies in Brazil, Saudi Arabia, and Serbia. It’s still being reviewed for antitrust concerns by several international governments, most notably the European Commission. 

Yesterday, Microsoft announced it had entered a 10-year commitment with Nintendo to bring Call of Duty back to its platforms. It also stated it plans to keep the series on Steam and has repeatedly declared its willingness to keep Call of Duty on PlayStation for the foreseeable future. Of course, all of those promises hinge on whether or not the deal passes all of its regulatory checks. Sony has been one of the most vocal opponents of the acquisition, claiming such consolidation to be anti-competitive and harmful to its brand.