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The Federal Trade Commission is filing a lawsuit to block Microsoft’s proposed acquisition of Activision Blizzard. It claims the acquisition, if completed, would give Microsoft an unfair advantage over its competitors.
This morning, the four-member committee voted to file the lawsuit. The three Democratic members (Chairman Lina Khan, Rebecca Slaughter and Alvaro Bedoya) voted in favor and the Republican (Christine Wilson) voted against. According to a report from The Washington Post, the commission was said to have met with Microsoft the day before to discuss concessions.
Judging by the press release, the commissioners weren’t convinced that Microsoft wouldn’t withhold Activision Blizzard’s popular games from competing services. The FTC cited Microsoft’s acquisition of Zenimax, and how games like Starfield and Redfall became exclusive after its close.
Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement: “Microsoft has already shown that it can and will withhold content from its gaming rivals. Today, we’re 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.
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The FTC isn’t the only government agency concerned about the implications of the takeover. The UK Competition and Markets Authority is currently investigating the matter. It recently concluded the first phase of the investigation and expressed its concerns in its problem statement.
The history of the planned takeover
Microsoft announced its intention to acquire the publisher in January. This acquisition would make it the regent of popular game franchises such as Call of Duty, Candy Crush, World of Warcraft and many others. It offered about $69 billion for Activision Blizzard.
Concerns about the size of the acquisition arose almost as soon as Microsoft announced it. The FTC reportedly investigated the deal almost immediately. Daniel Ahmad, senior analyst at Niko Partners at the time Microsoft would have to pay Activision $3 billion if the deal was blocked.
The current focal point of the antitrust issues is the Call of Duty franchise. Sony has repeatedly claimed, in public statements focused primarily on the CMA’s investigation, that Microsoft could undermine its competition through these popular and lucrative games. According to Sony, it could stop publishing it on Sony’s platforms, or it could offer it through its Xbox Game Pass subscription service. Sony claims Call of Duty on Game Pass would reduce demand for Sony consoles even if Call of Duty continues to be published on it.
Microsoft, in turn, replied that its competitors have numerous exclusive titles of their own. It is also being offered to sign 10-year deals with Sony, Nintendo and Valve (the company behind PC games store Steam) to release Call of Duty titles on their platforms. It announced earlier this week that it has closed such a deal with Nintendo.
Brad Smith, Microsoft Vice Chairman and President, said in a statement to The Verge: “We continue to believe this deal will increase competition and create more opportunities for gamers and game developers. We’ve been committed to addressing competition concerns from day one, including offering proposed concessions to the FTC earlier this week. While we believed in giving peace a chance, we have complete confidence in our cause and welcome the chance to take our case to court.”
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