“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Veduta, director of the FTC’s Bureau of Competition. “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.”
The US Federal Trade Commission is trying to block Microsoft Corp. from buying Activision Blizzard Inc. for $69 billion, claiming that the combination of the producer of the Xbox and well-known gaming publisher would hurt competition. The complaint, which was submitted in its internal court, was approved by a 3-1 decision of the commission. Regulators warned that Microsoft’s ownership of Activision may harm other competitors in the $200 billion video game business by preventing them from accessing the studio’s most popular titles. Microsoft would overtake Tencent Holdings Ltd. and Sony Group Corp. to become the third-largest gaming firm following the acquisition.
An FTC representative who requested anonymity, was worried that Microsoft may restrict access, postpone distribution, or lower the quality of over activating Blizzard’s most well-known games on competing platforms. According to the source, these issues touch not only gaming consoles but also subscription services and cloud-based gaming, two still-evolving businesses.
The Microsoft-Activision merger was approved by Brazilian antitrust inspectors in October, but other competition authorities, such as those in the UK and the EU, have expressed worry. The transaction won’t be finalized until the following year. Microsoft announced an agreement on Tuesday to bring Call of Duty to Nintendo Co. platforms and the Steam PC gaming platform. The business claimed to have also put out a plan that would retain Call of Duty on Sony’s PlayStation for the following ten years, but the Japanese electronics behemoth has thus far rejected efforts to come to an agreement. Sony has passionately opposed the Activision merger, mostly out of worry that the US tech giant may restrict access to games like Call of Duty to its own gaming services.
The proposed acquisition of Activision Blizzard by Microsoft would be the biggest ever for the company and one of the top 30 acquisitions in history. Microsoft would gain access to some of the most well-known video game titles, like Call of Duty and World of Warcraft, as a result of the deal. The virtual world building game Minecraft and the Halo franchise are already properties of the Xbox maker. “We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” said Microsoft President Brad Smith. He said that the business was dedicated to addressing concerns about unfair competition and that it had already made concessions to the FTC this week. “We have complete confidence in our case and welcome the opportunity to present our case in court,” Smith added. Activision shares fell 1.5% to $74.76 after falling as much as 3.9% earlier. Microsoft shares rose 1.2% to $247.40.
In a letter, Activision Blizzard Chief Executive Officer Bobby Kotick assured employees he is confident that the deal will close. “The allegations that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge, “Kotick said, adding that the combined company would be “good for players,” despite a regulatory environment that he says is “focused on ideology and misconceptions about the tech industry.
The FTC set August 2, 2023 as the start date for its internal trial. According to Jennifer Rye, a Bloomberg Intelligence analyst, the judge has handed down preliminary rulings in similar merger cases in the agency’s internal court between seven and twelve months after the trial started. A decision by FTC administrative Law Judge D. Michael Chappell would most likely be rendered in the first half of 2024. Microsoft or the FTC staff representing them in court may then appeal his decision to the agency’s commissioners. The purchase will be finalized by June 30 2023, the end of Microsoft’s current fiscal year, according to Microsoft and Activision. If the FTC wants Microsoft to delay sealing the deal until after the trial is over, it will need to file a separate lawsuit in federal court.
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