FTC Sues to Block Microsoft’s $69 Billion Acquisition of Activision Blizzard

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The Federal Trade Commission has sued to block Microsoft’s $69 billion acquisition of Activision Blizzard, alleging that the Windows and Xbox maker would gain control of top video game franchises, allowing it to harm competition in the high-performance gaming console and subscription services market by denying or degrading rivals’ access to popular content:

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.”

The FTC brought up the following in its complaint against Microsoft:

  • Xbox Series X|S are one of only two types of high-performance video game consoles
  • Microsoft already owns a leading video game content subscription service, Xbox Game Pass
  • Microsoft already offers a cutting-edge cloud-based video game streaming service
  • Activision is one of only a very small number of top video game developers in the world
  • Call of Duty, World of Warcraft, Diablo, and Overwatch, which have a combined 154 million monthly active users around the world, are currently available on many devices

“But that could change if the deal is allowed to proceed,” the FTC wrote regarding that final bullet point. “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 agency reasoned.

Microsoft confirmed this week that it had offered 10-year deals to Sony and Nintendo to ensure that Call of Duty would be available on their respective platforms, although it remains to be seen whether the acquisition will be successful or not based on rising complaints.

Microsoft was able to finalize its acquisition of ZeniMax Media, the parent company of Bethesda Softworks and its eight studios, including Bethesda Game Studios and id Software, in March 2021.

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Tsing Mui
News poster at The FPS Review.

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