FTC sues to block Microsoft’s $69bn Activision acquisition

The Federal Trade Commission of the United States announced on Thursday that it has sued Microsoft to block its acquisition of Activision Blizzard for $69 billion, saying that it would ‘’enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.’’

The announcement comes weeks after sources familiar with the matter told Politico that the FTC was likely to file a lawsuit against the proposed acquisition.

In a complaint, which was voted 3-1, the FTC said that Microsoft already has a history of ‘’acquiring and using valuable gaming content to suppress competition from rival consoles’’. 

For example; after buying its parent company Zenimax, Microsoft made some of the titles of video game developer and publisher Bethesda its own exclusives, despite assuring European antitrust authorities that it wouldn’t do so, the agency said.

“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.“

Earlier this week, Microsoft’s President Brad Smith said that they offered Sony a 10-year contract to launch future Call of Duty titles on PlayStation the same day they get released on Xbox, but the proposal hasn’t been accepted by Sony yet.

In its statement, the FTC also said that Activision, the developer of many successful titles such as Call of Duty, World of Warcraft, Diablo, and Overwatch, is one of the few companies in the world that release high-quality games for multiple platforms including mobile devices, consoles and PCs.

‘’But that could change if the deal is allowed to proceed,’’ the agency said. ‘’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.’’

Following the FTC’s announcement, Microsoft’s President Smith said: ‘’We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers. We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. 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.”

Activision Blizzard CEO Bobby Kotick also shared a letter with employees, saying: ‘’I want to reinforce my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge.’’

Microsoft’s proposed Activision deal, which has been approved by Saudi Arabia and Brazil, is also currently facing antitrust probes in the United Kingdom and the European Union.