The FTC is Suing Microsoft to Block Proposed Activision Blizzard Acquisition

Recent reports claimed that the United States’ Federal Trade Commission (FTC) would be suing Microsoft to block the tech company’s proposed $69 billion acquisition of Activision Blizzard, and that’s now been made official, with the FTC filing an antitrust lawsuit in administrative court after an internal 3-1 vote in favour of the decision (via The Washington Post).

The FTC says the acquisition, should it go through, give Microsoft an unfair advantage over competitors in console, subscription, and cloud gaming markets, owing to Activision’s ownership of massive properties like Call of Duty, World of Warcraft, Candy Crush, and more. As per the Commission, once the deal closes, Microsoft would have the power to withhold major properties from rival platforms like PlayStation, or use its power to manipulate pricing and releasing inferior versions of games on competing platforms.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said the FTC’s Bureau of Competition director Holly Vedova, referring to the exclusivity of upcoming titles like Starfield and Redfall. “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.”

Microsoft president Brad Smith has issued a response on Twitter, saying the proposed acquisition will “expand competition and create more opportunities for gamers and game developers”, and that to address competition concerns, the company “proposed concessions to the FTC” earlier this week. He added: “While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court.”

Activision Blizzard CEO Bobby Kotick has also issued a response. In a statement sent out to company employees, Kotick wrote: “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.”

He added: “We believe these arguments will win despite a regulatory environment focused on ideology and misconceptions about the tech industry.”

Previous reports have claimed that the under-fire Activision CEO is likely to leave his post once the Microsoft deal is finalized.

Both Microsoft and Activision have previously stated that they would be ready to fight in court to ensure that the deal goes through.

Microsoft recently announced that it has entered into an agreement with both Nintendo and Valve to bring Call of Duty to future Nintendo platforms and Steam for the next 10 years. A similar deal has also been offered to Sony, though it hasn’t been accepted.

Microsoft’s proposed acquisition of Activision Blizzard was greenlit by regulatory authorities in Brazil in October, though it has been facing greater scrutiny in other parts of the world. The EU’s European Commission and the UK’s Competition and Markets Authority have both expressed concerns over how the deal could impact competition should it be approved.