The Federal Trade Commission on Thursday sued Microsoft Corp. to block its $69 billion deal to buy Activision Blizzard Inc.
The acquisition, which would be Microsoft’s
MSFT,
largest and the biggest ever in the video gaming industry, would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business,” the FTC claimed.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “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.”
FTC members pointed to Microsoft’s record of “acquiring and using valuable gaming content to suppress competition from rival consoles,” including its acquisition of ZeniMax, parent company of Bethesda Softworks.
Microsoft President Brad Smith indicated the software giant will fight the lawsuit. In a statement, he said Microsoft has “been committed since Day One to addressing competition concerns.”
“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,” Smith said.
Activision CEO Bobby Kotick, in a statement, said the suit “sounds alarming, so I want to reinforce my confidence that this 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.”
Still, In recent weeks Microsoft has taken steps to demonstrate to regulators its acquisition of Activision would not give it an unfair advantage in the gaming market. On Tuesday, Microsoft said it would bring the “Call of Duty” franchise to Nintendo Co.’s
7974,
Switch, a rival of Microsoft Xbox, and Microsoft has said it would make Call of Duty available on rival Sony Group Corp.’s
SONY,
PlayStation.
“It’s a bad idea,” Geoffrey Manne, president of the International Center for Law and Economics, said of the FTC’s lawsuit vs. Microsoft. “There may be markets in which some activities of some of these large tech companies cause concerns, but when they are expanding into new markets or enhancing competition in markets where they aren’t leaders, we should be encouraging them, not threatening them with lawsuits.”
The government’s action in administrative court marks the first serious regulatory threat to Microsoft’s business in more than two decades, when the Justice Department brought a landmark antitrust lawsuit against the software giant that took years and was settled in 2002. Since then, Microsoft had sidestepped antitrust scrutiny and Smith in particular has focused the glare on its tech rivals Amazon.com Inc.
AMZN,
Apple Inc.
AAPL,
Alphabet Inc.’s
GOOGL,
GOOG,
Google, and Facebook parent company Meta Platforms Inc.
META,
Read more: Microsoft’s shadowy presence in antitrust push is angering the rest of Big Tech
Shares of Microsoft are up 1% in trading Thursday. Activision’s
ATVI,
stock is down 1.5%.
The FTC’s lawsuit comes the same day it is heading to court in San Jose, Calif., in what is expected to be a three-week trial to bloc Meta’s $300 million acquisition of VR fitness app maker Within.
The trial is likely to showcase an intriguing look at the agency’s ability to stifle alleged anticompetitive conduct using largely untested legal theories at a time when Congress is sitting on tech antitrust legislation.
