The Federal Trade Commission filed a lawsuit Thursday to block Microsoft’s $69 billion acquisition of Activision Blizzard, challenging one of the largest technology acquisitions in history.
the administrative complaint filed Thursday by the FTC alleges that the successful deal, which would make Microsoft the world’s third-largest video game publisher, would give Microsoft “both the means and the motive to harm competition”, alleging that it could negatively affect the prices of video games as well such as game quality and player experiences on consoles and gaming services, according to a statement from the agency.
“We continue to believe that this agreement will broaden competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s president, said in a statement on Thursday. “We have been committed from day one to address competition concerns, including by offering proposed concessions to the FTC earlier this week. While we believed in giving peace a chance, we have full confidence in our case and welcome the opportunity to present our case in court.”
In an email sent to employees and provided to CNN, Activision CEO Bobby Kotick said the FTC’s lawsuit may sound “alarming” but he is confident the deal will close. “The charge that this agreement is anti-competitive does not align with the facts, and we believe we will win this challenge,” he said.
The US merger challenge reflects the biggest setback yet for Microsoft, as it has aggressively courted regulators around the world in hopes of persuading them to approve the deal. It also marks the FTC’s most significant challenge to the tech industry since it sued to break up Facebook owner Meta in 2020, underscoring vocal promises by US officials of a tough antitrust enforcement agenda. .
“This is the boldest move the Biden administration has made to date to rein in mergers involving Big Tech and to expand the scope of merger enforcement,” said William Kovacic, a George Washington University law professor and Former FTC Chairman. “More than anything else they’ve done, this embodies their commitment to being tough on mergers.”
The case could also mark a turning point in how regulators and courts review proposed deals, at a time when US antitrust authorities have intentionally filed tough cases to test the law and keep up. with technological advances.
Microsoft’s proposed deal would give it control over key video game franchises, including “Call of Duty,” “World of Warcraft” and more. That could give him enormous leverage over the future of a multibillion-dollar industry, the FTC said.
“Today we seek to prevent Microsoft from gaining control of a leading independent game studio and using it to harm competition in multiple fast-growing and dynamic gaming markets,” Holly Vedova, director of the FTC’s Office of Competition, said in a statement. a statement.
UK and European Union officials have also discussed the deal as potentially anti-competitive. But the FTC’s complaint marks the first attempt by an antitrust regulator to block the deal entirely.
Microsoft could use its ownership of Activision titles to raise prices or to try to funnel gamers to gaming platforms it controls, such as Xbox or Windows, the FTC said. The deal could also affect the emerging market for cloud-based gaming services, the FTC said, which Microsoft is involved in through its subscription service, Xbox Game Pass.
In recent days, Microsoft has announced a series of partnerships ostensibly aimed at fending off claims that it would hide gaming content from rivals. This week, Microsoft said it had reached a 10-year agreement with Nintendo, guaranteeing that it will have access to Call of Duty for the foreseeable future.
In a Wall Street Journal op-ed on Monday, Microsoft’s Smith said an FTC lawsuit to block the Activision deal would be a “big mistake,” adding that the acquisition would allow Microsoft to innovate new features, such as the ability to that the consumer plays the same. game on multiple devices, just like they do with streaming TV shows or music.
Months earlier, in February, Microsoft made an 11-point commitment related to all of its app marketplaces and gaming business. The list included a promise, which would cover Activision’s proposed deal, not to give preferential treatment to its own games published on the digital marketplaces it manages.
The FTC’s complaint uses an internal administrative process that does not involve filing in federal court. That could give the FTC a theoretical advantage, Kovacic said, since an FTC administrative law judge may be inclined to give regulators the benefit of the doubt. But, he added, the FTC still has to gather compelling evidence and arguments to win the case, which could take years.