The Federal Trade Commission on Thursday filed a complaint seeking to block Microsoft’s proposed acquisition of Activision Blizzard over concerns that it would harm competitors by withholding their access to popular titles, such as Call of Duty. The agency claims that Microsoft has a history of denying competitors access to content it acquired. Microsoft argues that the proposed bid will expand competition.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “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.”
The FTC reminds us that when Microsoft took over ZeniMax (the owner of Bethesda Softworks), it assured European antitrust agencies that it would not withhold games from competing console platforms. Yet, sometime after the deal was completed, Starfield and Redfall games were made Microsoft exclusives.
Being a leading independent game publisher, Activision Blizzard currently offers its titles on all platforms, including Microsoft’s Xbox and Windows, Sony’s PlayStation, and Nintendo’s Switch, to name a few. In addition, Activision has some of the world’s most-played titles — including Call of Duty, World of Warcraft, Diablo, and Overwatch — in its stable, so should Microsoft decide to harm its rivals by blocking their access to these games, it will affect hundreds of millions of gamers worldwide.
The FTC is by far not the first agency or organization aiming to block Microsoft’s proposal to take over Activision in a record $68.7 billion deal, which may become the biggest gaming industry transaction ever and one of the largest deals in the history of the high-tech industry. Numerous antitrust authorities are reviewing the proposed bid in-depth. Many companies, including Microsoft’s rival Sony, asserted that Microsoft would make popular titles from Activision Blizzard exclusive to its consoles and cloud gaming platform.
Microsoft itself denies any plans of wrongdoing and argues that the deal will expand competition and create more opportunities for gamers and developers.
“We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers,” said Brad Smith, Vice Chair and President of Microsoft. “We 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.”
It is not the first time the FTC has sued to block a large takeover deal. In December 2021, the FTC filed a complaint to block the Nvidia-Arm merger, citing concerns that once Nvidia gains control over Arm, it would withhold certain technologies from rivals to gain an advantage over them. Nvidia called off the proposal in February 2022, citing significant regulatory challenges.