FTC tries to prevent Microsoft from buying blockbuster Activision Blizzard

FTC tries to prevent Microsoft from buying blockbuster Activision Blizzard
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The Federal Trade Commission on Thursday challenged one of the largest tech buyouts in history to block Microsoft’s $69 billion acquisition of Activision Blizzard.

Administrative Complaint filed by the FTC on Thursday It claims that the blockbuster deal, which will make Microsoft the world’s third-largest video game publisher, will give Microsoft “both the means and the motive to hurt competition” – which it claims could negatively impact the prices and quality of gameplay for video games and consoles, according to an agency’s statement. and player experiences on gaming services.

“We continue to believe this deal will increase competition and create more opportunities for gamers and game developers,” Microsoft president Brad Smith said on Thursday. said. “Since Day One, we have been committed to addressing competition concerns, including submitting the concessions proposed earlier this week to the FTC. While we believe peace should be given a chance, we have full confidence in our case and welcome the opportunity to present our case in court.”

Activision CEO Bobby Kotick said in an email to employees that was provided to CNN that the FTC lawsuit might sound “worrying” but he was confident the settlement would work out. “The allegation that this agreement is anti-competitive does not match the facts and we believe we will win this fight,” he said.

The US merger fight reflects the biggest setback ever for Microsoft as it aggressively courtes regulators around the world in hopes of persuading them to bless the deal. It also marks the FTC’s most significant challenge to the tech industry since Facebook filed a lawsuit in 2020 to disband its owner Meta, and underscores US officials’ audible promises of a tough antitrust enforcement agenda.

“This is the boldest move the Biden administration has ever made to expand the field of merger enforcement and police mergers involving Big Tech,” said William Kovacic, a law professor at George Washington University and a former FTC chairman. “More than anything else they’ve done, it embodies their determination to be tough on mergers.”

The case could also be a turning point in how regulators and courts review proposed deals at a time when US antitrust enforcers are deliberately making tough cases to test the law and keep up with advances in technology.

Microsoft’s proposed deal will give Microsoft control over key video game franchises, including “Call of Duty”, “World of Warcraft” and more. The FTC said this could have a tremendous impact on the future of a multi-billion dollar industry.

“Today we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to undermine competition in multiple dynamic and fast-growing games markets,” said Holly Vedova, director of the FTC’s Competition Bureau.

Officials in the UK and European Union have also viewed the deal as potentially anticompetitive. But the FTC complaint marks the first attempt by an antitrust regulator to directly block the deal.

The FTC said Microsoft could use its ownership over Activision titles to raise prices or steer gamers to gaming platforms it controls, like Xbox or Windows. The FTC said the deal, which Microsoft is involved in through its subscription service Xbox Game Pass, could also impact the emerging market for cloud-based gaming services.

Recently, Microsoft has announced a series of partnerships, apparently aimed at eliminating claims that it will withhold game content from competitors. This week, Microsoft said it has reached a 10-year deal with Nintendo and will have access to Call of Duty in the foreseeable future.

In a Wall Street Journal article on Monday, Microsoft’s Smith said an FTC lawsuit to block the Activision deal would be a “huge mistake”, adding that the acquisition would allow Microsoft to develop new features like the ability for consumers to play the same thing. play games on multiple devices just like streaming TV shows or music.

Months ago, in February, Microsoft made an 11-point commitment to its entire app market and gaming business. The list included a commitment not to give preferential treatment to self-published games in the digital markets it governs, which would encompass the proposed Activision deal.

The FTC’s complaint uses an internal administrative process that does not involve filing with a federal court. This could give the FTC a theoretical advantage, Kovacic said, noting that an FTC administrative law judge may be inclined to benefit regulators from the doubt. However, he added that the FTC still needs to enumerate the convincing evidence and arguments to win the case, and that it may take years to conclude.

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