US FTC sues Microsoft to block its $69 bn Activision Blizzard acquisition

The US Federal Trade Commission (FTC) has sued tech giant Microsoft from acquiring leading video game developer Activision Blizzard and its blockbuster game ‘Call of Duty’ for $69 billion.

The FTC said that the deal, the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

“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,” Holly Vedova, Director of the FTC’s Bureau of Competition, said in a statement late on Thursday.

Microsoft President Brad Smith said in a tweet on Friday that they have been committed since “Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC”.

“While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court,” Smith posted.

Smith added that the company continues to believe that “our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers”.

In September, the UK market watchdog announced an in-depth probe into Microsoft’s all-cash deal to acquire gaming giant Activision Blizzard, if its concerns over antitrust practices are not met.

The Competition and Markets Authority (CMA) said it is concerned that Microsoft’s anticipated purchase of Activision Blizzard “could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming)”.

Microsoft’s Xbox Series S and Series X are one of only two types of high performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint.

Activision produces some of the most iconic and popular video game titles, including ‘Call of Duty’, ‘World of Warcraft’, ‘Diablo’ and ‘Overwatch’, and has millions of monthly active users around the world, according to the FTC’s complaint.

“Activision currently has a strategy of offering its games on many devices regardless of producer. But that could change if the deal is allowed to proceed,” said the FTC.

“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,” it argued.

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