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.
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Brandon Hill is a senior editor at Tom's Hardware. He has written about PC and Mac tech since the late 1990s with bylines at AnandTech, DailyTech, and Hot Hardware. When he is not consuming copious amounts of tech news, he can be found enjoying the NC mountains or the beach with his wife and two sons.
Consolidation of the big gaming industry publishers and studios needs to be stopped. These acquisitions always turn into disasters a few years after they complete. Less games, lower quality shipped products, and more monetization always results. I hate Bobby Kotick, but I don't want to like a bad merger deal with Microsoft as the way to get rid of him. Good on these gamers for wasting spending their time trying to stop the Microsoft acquisition of ABK.Reply
bigdragon said:Consolidation of the big gaming industry publishers and studios needs to be stopped.
Probably BUT...Sony and their ponies dug this ditch themselves. Screaming from the roof tops how Sony had console supremacy through game exclusivity. And they were right about exclusives and now that MS is trying to remedy the situation all of a sudden its unfair? When Sony has been buy exclusivity for years through contracts or studios purchases of their own. Sony has been doing the same thing since PS1 era. So NO, I have zero sympathy for Sony or its ponies. Let MS make the purchase... then lets tackle games industry being bought up. Sony made their bed now they need to lie in it. End of story from my perspective. I fanboy no one but this isn't on MS, yet.
Where were they when Sony bought Bungie?Reply
I guess they're not agains consolidation, they just draw an arbitrary line between what Microsoft and Sony do.
This is just tinkering at the edges. Who is to decide which company can swallow another, and why limit ourselves just to the gaming industry? What about energy companies, chemical giants, pharmaceuticals, food conglomerates, social media platforms, and countless others?Reply
We need a systemic solution: progressive corporation tax. The more market a company controls, the larger its tax. Anything above 10% of market share should be taxed at 99%. Then you don't need antitrust laws.
Can you imagine the boost to competitiveness and quality of software if Microsoft, Apple, Google, Amazon, Facebook, Intel, AMD, Ebay, PayPal were forced to split into numerous competing companies? We would have Windows 20 next year, and it would not be snooping on you any more.
I have been a gamer since the early 90's. This is just a progression of every business model. Prior to Microsoft, Sony and Nintendo buying studios the industry was consolidating from within. I remember in the late 90's and early 2000's you could find at least 4 different baseball, football, hockey, basketball games. Now that has dwindled down to one of each.Reply
This is what happens to an industry that has hit its limits and has reached diminishing returns and saturation. When EA purchased the NFL license in 2005 I saw the beginning of the end and I am convinced that was the turning point. Because it blocked others out from competing in the sports genre.
Then I watched as Sony began to payoff publishers to keep games away from the upstart XBOX. Then I watched as Microsoft paid publishers to make exclusive Japanese RPG's for the XBOX 360.
Then Sony countered by paying publishers for timed exclusives, then they paid for exclusive DLC, then it was timed DLC. I then watched Microsoft do the same. Does anyone spot a trend here? I do and that is they are all guilty of what they are accusing Microsoft of doing.
The difference is that Microsoft sees the current business model of buying hardware and going to the store to buy a physical game as reaching its limits. Microsoft wants to move the business model in the direction of digital access which Sony had no problems with until XBOX Game Pass was introduced.
Now Sony is trying to protect its island from erosion at all cost so they are now crying foul. If Sony had the money Microsoft has, I have NO doubt they would be doing the same thing because Sony's business model is stuck in the late 90's where Microsoft's business model allows you to play their games on devices they don't make.
Even Apple was threatened by XBOX Game Pass that they refused it on their devices.
Sony shouldn't have been allowed to acquire Bungie or the other studios they've been gobbling up recently. Likewise, Microsoft shouldn't have been allowed to acquire Bethesda. I cannot recall a time where these kind of large acquisitions led to more or better games. Investors get rich while gamers and consumers are left with PvP multiplayer spam, overly monetized, predatory, low-effort, grind games. This isn't a Sony vs Microsoft situation -- it's a big corporation vs consumers situation.atomicWAR said:Probably BUT...Sony and their ponies dug this ditch themselves.
Question: How many of those gamers in the class action lawsuit are Sony fanboys and fangirls?Reply
The FTC has a hill to climb here owing to the political complications. A 75% Democrat FTC team where the single Republican supports the acquisition, reportedly one Democrat more interested in concessions to ensure the deal goes ahead and the CWA Union also overwhelmingly supporting and lobbying for the acquisition.Reply
The FTC blocking it potentially leads to Microsoft pulling billions in donations to the Democratic Party, very likely results in legal action from the CWA and any FTC decision would ultimately be set aside if it reaches the Supreme Court because, well, partisan opportunity.
Class action lawsuits full of faux outrage by angry fanboys/girls are always comedy though.
The answer is simple: stop giving them your money and they will either drop the price, or go bankrupt. Let your wallet speak, instead of joining the masses complaining about this or that.Reply
The lawsuit itself lists everyone as a gamer, specifically naming PlayStation gaming. It makes me wondering if it's genuine or a PR stuntHeat_Fan89 said:Question: How many of those gamers in the class action lawsuit are Sony fanboys and fangirls?