Washington
CNN
—
The Federal Trade Commission on Thursday sued to block Microsoft’s $69 billion acquisition of Activision Blizzard, challenging one of the largest tech acquisitions in history.
The administrative complaint filed Thursday by the FTC alleges that the blockbuster deal, which would make Microsoft the third-largest video game publisher in the world, would give Microsoft “both the means and motive to harm competition” — claiming it could negatively affect prices of video games as well as game quality and player experiences on consoles and gaming services, according to an agency release.
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s president, said in a statement Thursday. “We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
In an email sent to employees and provided to CNN, Activision CEO Bobby Kotick said the FTC suit may sound “alarming” but he remains confident the deal will close. “The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge,” he said.
The US merger challenge reflects the biggest setback yet for Microsoft as it has aggressively courted 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 it sued to break up Facebook-owner Meta in 2020, underscoring US officials’ vocal promises of a tough antitrust enforcement agenda.
“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,” said Holly Vedova, director of the FTC’s Bureau of Competition, in a statement.
Microsoft’s proposed deal would give it control over key video game franchises, including “Call of Duty,” “World of Warcraft” and more.
Officials in the United Kingdom and the European Union have also scrutinized the deal as potentially anticompetitive. But the FTC complaint marks the first attempt by an antitrust regulator to block the deal outright.
Microsoft could use its ownership over Activision titles to raise prices, or to try to funnel players to gaming platforms it controls, such as Xbox or Windows, the FTC said. The deal could also affect the emerging market for cloud-based gaming services, the FTC said, which Microsoft is involved with through its subscription service, Xbox Game Pass.
In recent days, Microsoft has announced a slew of partnerships apparently intended to head off claims that it would withhold gaming content from rivals. This week, Microsoft said it had reached a 10-year deal with Nintendo ensuring that it will have access to Call of Duty for the foreseeable future.
In a Wall Street Journal op-ed Monday, Microsoft’s Smith said an FTC suit to block the Activision deal would be a “huge mistake” and added that the acquisition would allow Microsoft to innovate new features such as the ability for consumer to play the same game on multiple devices, just as they can with streaming TV shows or music.
Months earlier, in February, Microsoft made an 11-point pledge related to all of its app marketplaces and its gaming business. The list included a promise, which would cover the proposed Activision deal, not to give preferential treatment to its own published games on digital marketplaces it runs.
