January 29, 2023

Microsoft sued by Call of Duty gamers who oppose Activision merger

About two weeks after the Federal Trade Commission filed a lawsuit to block Microsoft’s acquisition of Activision Blizzard, 10 gamers from California, New Jersey, and New Mexico have banded together to file a lawsuit against Microsoft.

Echoing many of the FTC’s concerns, the gamers hope to apply pressure and prevent Microsoft from making “the biggest technology deal ever in the video game market” and swallowing up its biggest competitor in the gaming industry.

In their complaint, the plaintiffs describe Activision Blizzard as a critical rival that drives innovation and price competition across the industry. If the acquisition is allowed, the public could suffer loss and damage because Microsoft would supposedly wield more market power than it already has – suddenly gaining “the ability to foreclose rivals, limit output, limit consumer choice, reduce, raise prices and further inhibit competition.”

Under the Clayton Antitrust Act, consumers have similar rights as industry competitors to oppose acquisitions such as this one, allowing courts to weigh the anticompetitive harm caused by consumers. The gamers are suing Microsoft for allegedly violating the antitrust law and are very concerned that the prices of their favorite games will soon rise, while the overall quality of games could decrease. If the deal goes through, they claim Microsoft would be in a position to assemble the best talent and most popular games to potentially gain “excessive market power”.

A Microsoft spokesperson told Ars that the gamers’ worst fears are unfounded.

“This deal will increase competition and create more opportunities for gamers and game developers as we try to bring more games to more people,” a Microsoft spokesperson told Ars.

But the FTC seems to agree more with gamers, pointing to “Microsoft’s record of acquiring and using valuable gaming content to stifle competition from rival consoles” in a press release.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC Bureau of Competition, warned in the press release.

Loyal gamers fear a possible monopoly

The people filing the lawsuit bring a unique perspective to the debate over Microsoft’s acquisition of Activision, a deal Microsoft hopes to close in 2023. In their complaint, they say gamers are particularly vulnerable to price hikes because Microsoft knows they’re unlikely to substitute other games for their favorites. That means Microsoft could take beloved titles, such as Call of Duty games, that all claimants play, and shut down access to platforms or services outside of Microsoft’s gaming ecosystem.

Microsoft has already publicly announced that it will make Call of Duty available on rival consoles from Sony and Nintendo for the next 10 years. But like the FTC, plaintiffs say they’ve seen Microsoft make similar promises before, only to go back on their word once an acquisition closes, which it did with Star field following the acquisition of ZeniMax Media in 2020.

Plaintiffs also argue that just because Microsoft promises to make a game available on other consoles or game systems does not mean it will be available at the same time, of the same quality, or with the same features and upgrades.

Consider, the complaint suggests, whether Microsoft would use popular Activision titles to bolster its dominant position and drive competitors out of the emerging cloud-based gaming market, essentially stifling competition in a market before it can even flourish. Similarly, any exclusive benefits of hugely popular games offered only within Microsoft’s gaming ecosystem could drive users away from competing platforms, with the complaint that Microsoft might even have “the ability and incentive to develop strategies to outsmart Sony.” screens”.

One way the quality of game content could be declining, the complaint says, is through ongoing consolidations in the gaming industry. The deal could put Microsoft in a position to attract the best game developers, potentially starving independent game studios for access to top talent. In this scenario, the complaint alleges that the industry could suffer from lower wages, limited mobility, and poorer working conditions, with Microsoft in a powerful position to set industry standards.

Ars was unable to immediately reach attorneys representing gamers, but the complaint says plaintiffs believe the brighter future for the gaming industry is one where Activision Blizzard continues to exist as a separate market entity, fueling industry-wide competition as one of Microsoft’s only major rivals.

“The industry competition engendered by Activision Blizzard must be preserved to ensure that the next generation of video game innovation and value is enhanced by competition, not stifled by consolidation,” their complaint states.

Gamers suing have asked a U.S. federal court to rule that Microsoft’s acquisition of Activision Blizzard violates antitrust law. Following in the footsteps of the FTC, they are fighting for the merger to be permanently blocked.

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