The Federal Trade Commission (FTC) has filed a lawsuit to block Microsoft’s proposed $69bn acquisition of Activision Blizzard, claiming that the deal would harm competition in the video game industry.
The suit is the first attempt by an antitrust regulator to block the deal outright and marks the biggest challenge to the tech industry since the FTC sued to break up Facebook owner Meta in 2020.
Officials in the UK and EU have also scrutinized the proposed acquisition as potentially anti-competitive. The case could mark a turning point in how regulators and courts review proposed deals, as US antitrust enforcers have begun bringing more difficult cases to test the law and keep up with advances in technology.
Microsoft’s proposed acquisition of Activision Blizzard would give it control over key video game franchises such as “Call of Duty” and “World of Warcraft”, which could give it enormous influence over the future of the multibillion-dollar video game industry.
he FTC alleges that Microsoft could use its ownership of Activision titles to raise prices or try to funnel players to gaming platforms that it controls, such as Xbox or Windows.
The deal could also affect the emerging market for cloud-based gaming services, in which Microsoft is involved through its subscription service, Xbox Game Pass.
In response to the FTC’s lawsuit, Microsoft’s President, Brad Smith, said that the company continues to believe that the deal will expand competition and create more opportunities for gamers and game developers.
He added that the company has offered concessions to the FTC and is confident in its case. Activision CEO Bobby Kotick also remains confident that the deal will close, despite the FTC’s suit.
In recent days, Microsoft has announced a series of partnerships intended to head off claims that it would withhold gaming content from rivals.
This week, it said that it had reached a 10-year deal with Nintendo ensuring that it will have access to Call of Duty for the foreseeable future.
In a Wall Street Journal op-ed, Microsoft’s Smith said that an FTC suit to block the Activision deal would be a “huge mistake” and added that the acquisition would allow Microsoft to innovate new features such as the ability for consumers to play the same game on multiple devices.
In conclusion, the FTC’s lawsuit is a significant challenge to Microsoft’s proposed acquisition of Activision Blizzard and could have far-reaching implications for the tech industry. The case will be closely watched as it could set a precedent for how regulators and courts review proposed tech deals in the future.