This could be the nail in the coffin for the Microsoft acquisition of Activision Blizzard.
It is official the FTC (Federal Trade Commission) has sued Microsoft to try and stop the $69 billion acquisition of Activision Blizzard.
The lawsuit asserts that the agreement would give Microsoft an unfair competitive advantage in the video gaming market, ultimately stifling competition.
The FTC said that if the deal was to go through, it:
“would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.”
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.
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.”
This move comes as quite a surprise as just last month the impression was that the FTC was probably on board with the sale.
Along party lines, the FTC commissioners decided to support the lawsuit, with the three Democratic members voting in favor of it. In a meeting held behind closed doors, the lone Republican commissioner, Christine S. Wilson, cast a vote against the lawsuit.
The FTC went on to say:
“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.”
The deadline for closing the deal is fast approaching being set for July of 2023 and it seems that this move by the FTC has the potential to derail the entire deal.
There have been a few regulators in various countries that have put the deal under a microscope already.
The merger’s most prominent foe is Sony. It has voiced concern that Microsoft would restrict Xbox systems to just play titles like Call of Duty. Which could cost Sony hundreds of millions of dollars annually.
Microsoft has maintained that it wants to maintain Call of Duty on the PlayStation. It also claims to have made a 10-year deal with Sony to that end.
Microsoft announced a deal with Nintendo to bring Call of Duty games to the latter’s platforms if the merger goes through just before the FTC’s vote.
Steam will also continue to carry Call of Duty thanks to a different agreement with Valve.
Bobby Kotik CEO of Activision Blizzard himself reiterated to employees that:
“This sounds alarming, so 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.”
In addition, he said:
“A combined Microsoft-[Activision Blizzard King] 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.”
The fight continues, and we will continue to keep you updated on the latest developments.