January 28, 2023

The US Federal Trade Commission is filing a lawsuit to block Microsoft’s $69 billion acquisition of Activision Blizzard, alleging the deal would allow the company to stifle competition in the gaming industry.

In a press release announcing the lawsuit, the FTC pointed to Microsoft’s 2021 acquisition of ZeniMax and the company’s subsequent decision to make games from its subsidiaries — namely Bethesda’s Starfield and Redfall — exclusive to Microsoft devices, despite that it had previously assured European regulators that it had no incentive to withhold games from rival consoles.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, the FTC’s director of bureau competition, said in a statement. “Today we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

The FTC goes on to say that Activision Blizzard is “one of the few top video game developers in the world creating and publishing high-quality video games for multiple devices,” before noting the publisher’s titles — including titles like Call of Duty , Overwatch and World of Warcraft together currently attract 154 million monthly active users.

“But that could change if the deal goes through,” the FTC adds. “With control of Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s prices, degrading Activision’s game quality or the player experience on rival consoles and game services, change the terms and timing of access to Activision’s content, or completely withhold content from competitors, resulting in harm to consumers.”

A Washington Post report expands on the FTC’s arguments, saying the lawsuit adds that the Activision Blizzard deal would give Microsoft an unfair advantage — and curb innovation — in areas such as gaming subscription services and cloud gaming.

The FTC is the first regulator to try to block Microsoft’s $69 billion acquisition of Activision Blizzard; several other countries, including Saudi Arabia and Brazil, have already approved the deal.

However, the acquisition is currently under close scrutiny in both the UK and Europe, where each regulator is set up independently to announce the findings of a more “in-depth” Phase 2 review of the proposal early next year.

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