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FTC sues to block Microsoft-Activision Blizzard merger

FTC argues that Microsoft would gain control of Activision Blizzard's top video game franchises and then use it to harm competition in rival gaming consoles.

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The Federal Trade Commission is going after Microsoft’s $69 billion takeover of Activision Blizzard. On Thursday, FTC sued the tech giant in order to block it from acquiring the leading video game developer that owns popular games like the Call of Duty franchise. Microsoft owns the gaming console Xbox and provides the Game Pass subscription and cloud gaming services. On the other hand, Activision Blizzard is a top video game developer that creates and publishes high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices.

FTC claims that if the software maker takes over Blizzard, it will use its position to kill the competition. In its complaint, FTC highlighted Microsoft’s previous game takeovers, such as developer Bethesda Softworks and its parent company ZeniMax, saying the company made some game titles(Starfield and Redfall) exclusive despite assuring European regulators it had no intention to do so. The agency argues that the maker of Xbox would gain control of Activision Blizzard’s top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content

The Director of the FTC’s Bureau of Competition, Holly Vedova said, “Microsoft has already shown that it can and will withhold content from its gaming rivals.” She further added, “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.”

In response to the complaint, Microsoft’s president, Brad Smith, said a statement that the company is likely to challenge the FTC’s decision. “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” Smith said. Recently, Microsoft also said that it would make Call of Duty available on Nintendo devices for 10 years.

FTC fears that Activision Blizzard’s franchises could be misused by Microsoft to harm competition by manipulating 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.

Meanwhile, Activision Blizzard CEO Bobby Kotick reassured employees on Thursday that in spite of the FTC pushback, the deal was still on track. “This sounds alarming, so I want to reinforce my confidence that this deal will close,” Kotick told TechCrunch. “The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge.”

Other than Call of Duty, Activision Blizzard houses some of the most iconic games including World of WarcraftDiablo, and Overwatch. These games are available on many devices regardless of producer. It has millions of monthly active users around the world, according to the FTC’s complaint.

 

 

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