Two weeks ago, we learned that Microsoft is facing heat from the U.S. Federal Trade Commission (FTC) over its proposed deal to acquire Activision Blizzard for nearly $69 billion. Now it appears that the FTC isn’t the only group looking to throw cold water on this blockbuster deal; a private consumer lawsuit filed in a California federal court also targets Microsoft.
The lawsuit was filed by ten gamers from California, New Jersey, and New Mexico, who allege “the video game industry may lose substantial competition, and Microsoft may have far-outsized market power, with the ability to foreclose rivals, limit output, reduce consumer choice, raise prices, and further inhibit competition.” The lawsuit goes on to decry that lack of competition in the video game industry and states that the Activision Blizzard acquisition is just the latest in a long line of Microsoft takeovers during the past eight years that have been anti-consumer.
The lawsuit points out Microsoft's past acquisitions of Mojang Studios, Playground Games, Obsidian Entertainment, ZeniMax Media, and Rare Ltd. “The proposed acquisition of Activision Blizzard by Microsoft is part of a dramatic wave of consolidation and stands to further lessen competition and harm consumers,” the plaintiffs allege. It’s also assumed that software developers in the video game industry might also be negatively affected with “substantially less choice among employers, and Microsoft may have outsized market power in hiring and retaining employees in the video gaming field, which requires specialized talent.”
If these complaints sound familiar, it’s because they basically mirror comments from the FTC. For example, the FTC also lamented that Activision Blizzard remains one of the few independent video game developers worldwide and has a vast and loyal following of gamers. It contends that Microsoft would inevitably erode the quality of games, cut off access to competitors like Sony and Nintendo, raise prices and alter terms regarding access to Activision content.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, FTC Bureau of Competition Director, on Dec. 8. “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.”
For its part, Microsoft says that many concerns about its proposal to acquire Activision Blizzard are unfounded and that it has taken steps to address concerns regarding competition in the video game space.
“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.
Activision Blizzard’s portfolio is huge and includes some of the most popular IP in the video game industry, including Call of Duty, Diablo, Overwatch, StarCraft and World of Warcraft.
