The Federal Trade Commission (FTC) has filed a lawsuit in an effort to block Microsoft’s planned acquisition of Activision Blizzard.
back in january, Microsoft has announced its plans to acquire Activision BlizzardHowever, according to a press release from US watchdog (Opens in a new tab)The FTC claims that Microsoft’s proposed acquisition of the Call of Duty publisher “will enable Microsoft to suppress competitors to its Xbox game consoles, rapidly growing subscription content, and cloud gaming business.”
The Revised complaint (Opens in a new tab) It itself claims that the merger will “significantly reduce competition or tend to create monopolies in multiple markets”. In layman’s terms, it could give Microsoft control over certain markets due to a lack of competition.
Not only does the FTC fear that the acquisition creates “increased incentive to use [Microsoft’s] Control of Activision titles harms Microsoft’s competitors,” but the complaint also outlines concerns about Microsoft’s ability to manipulate markets in the long term by adjusting Activision’s price points. Microsoft has already announced plans to Xbox exclusive price hike in 2023.
The lawsuit is a critical hurdle in Microsoft’s acquisition of Activision Blizzard, and it could end up putting an end to the proposed purchase altogether.
Much Ado About Everything
In recent years, Microsoft has loosened the company’s strings considerably; Its $68.7 billion bid for the Call of Duty publisher is just the tip of the iceberg. The lawsuit, filed by the FTC, highlights Microsoft’s recent acquisitions as a cause for concern, should the proposed acquisition of Activision Blizzard proceed.
Microsoft’s past behavior provides a preview of the combined company’s potential plans if it completes the proposed acquisition [of Activision-Blizzard]despite any assurances the company may give regarding its plans,” the complaint reads.
Its acquisition of Triple-A studio Bethesda’s parent company ZeniMax was used as an example. It was a highly controversial purchase, but the FTC notes how Microsoft told the European Commission (EC) that it “would have no incentive to withhold ZeniMax titles from competing consoles.”
But, shortly after the European Commission canceled the transaction, Microsoft announced its decision to go public with several newly acquired ZeniMax titles, including starfieldand Redfall Sheikh manuscripts 6, a Microsoft exclusive. ”
This means that despite Microsoft’s assurances to the European Commission, however pressure on Starfield to be a platform vendor As Bethesda’s first under Microsoft, the studio’s upcoming titles won’t be debuting on competing consoles PS5 or Nintendoswitch after every thing.
We still believe that the acquisition of Activision Blizzard will expand competition and create more opportunities for gamers and game developers.December 8, 2022
Microsoft President Brad Smith has responded publicly to the lawsuit Twitter (Opens in a new tab)specifically addressing the FTC’s concerns regarding Microsoft’s potential use of the merger as a major market disruptor that could isolate their competitors at source.
“We continue to believe that the acquisition of Activision Blizzard will expand competition and create more opportunities for gamers and game developers,” its first comment read.
In a follow-up, Smith stated: “While we believe in giving peace a chance, we have full confidence in our cause and welcome the opportunity to present it in court.” Tweets (Opens in a new tab).
Activision Blizzard has also responded publicly to the lawsuit, with CEO Bobby Kotick making news. Letter to the staff (Opens in a new tab) and addressing some of the allegations in the lawsuit.
“I want to reinforce my confidence that this deal will pan out,” Kotick says, echoing Smith’s sentiments. “The claim that this transaction is anti-competitive does not correspond to the facts, and we believe we will prevail in this challenge.”
Then Kotick appears to obliquely address the FTC, issuing a vote of confidence in the merger:
“We believe these arguments will prevail despite a regulatory environment focused on ideology and misconceptions about the tech industry.”
What’s next for Microsoft?
After the vote, the Federal Trade Commission Three to one agreed (Opens in a new tab) It will take Microsoft’s case to court. However, the suit should not be taken as a sure sign to stop the deal. While these can cause a general slowdown in procedures, they are not a done deal.
The FTC’s concerns aren’t the first, either. Earlier this year, Microsoft faced similar concerns (Opens in a new tab) from the UK-based Competition and Markets Authority, which claimed the merger could harm Sony by withholding headlines from the rival console. This shows that the FTC is not alone in being suspicious of Microsoft, as the proposed purchase is under close scrutiny by international regulators.
Regarding the FTC filing, Microsoft will have an opportunity to defend its position in court. At the time of writing, no court dates have been revealed.