Activision Blizzard's $69 billion purchase by Microsoft is challenged by the FTC in court

The blockbuster deal, which would make Microsoft the third-largest video game publisher in the world, is alleged to have given Microsoft "both the means and motive to harm competition" in the administrative complaint the FTC filed Thursday.

The Federal Trade Commission filed a lawsuit on Thursday to stop Microsoft from purchasing Activision Blizzard for $69 billion, calling it one of the biggest tech purchases in history.

The blockbuster deal, which would make Microsoft the third-largest video game publisher in the world, is alleged to have given Microsoft "both the means and motive to harm competition" in the administrative complaint the FTC filed Thursday. The agency claims this could negatively impact video game prices, game quality, and player experiences on consoles and gaming services.

Brad Smith, the president of Microsoft, said in a statement on Thursday, "We continue to believe that this deal will expand competition and generate more options for gamers and game creators." "We have been committed to addressing competition issues since Day One, and earlier this week we offered the FTC some concessions. Although we favored giving peace a shot, we are fully confident in our position and welcome the chance to argue it in court.

Activision CEO Bobby Kotick stated in an email to staff made available to CNN that while the FTC lawsuit may sound "alarming," he is still optimistic that the purchase will go through. "We believe we'll win this challenge," he said, "and the claim that this arrangement is anti-competitive doesn't correspond with the facts."

The US merger challenge represents Microsoft's worst setback to date because the company actively courted authorities around the world in the hope that they would approve the merger. It also describes the FTC's most serious challenge to the digital sector since it filed a lawsuit in 2020 to dissolve Facebook owner Meta, highlighting the outspoken promises made by US politicians of an aggressive antitrust enforcement strategy.

William Kovacic, a law professor at George Washington University and a former chairman of the Federal Trade Commission, remarked that this was the "boldest effort the Biden administration has made so far to monitor mergers involving Big Tech and to enlarge the arena of merger enforcement." This best represents their determination to become tough on mergers, more so than anything else they have done.

At a time when US antitrust enforcers have purposefully pursued challenging cases to test the law and stay up with technological advancements, the decision might also signal a turning point in how regulators and the courts evaluate proposed acquisitions.

With the proposed agreement, Microsoft would gain ownership over popular video game series like "Call of Duty," "World of Warcraft," and others. According to the FTC, this might give it a significant amount of control over the direction of a large industry.

According to Holly Vedova, head of the FTC's Bureau of Competition, "Today we seek to prevent Microsoft from acquiring control over a premier independent game company and utilizing it to undermine competition in many dynamic and quickly-expanding gaming marketplaces."

The agreement has also been investigated by officials in the UK and the EU for possible anticompetitive behavior. The FTC action, however, represents the first effort by a government agency to outright stop the merger.

According to the FTC, Microsoft may attempt to drive players to its own gaming platforms, such as Xbox or Windows, by increasing pricing for the Activision games it owns. According to the FTC, the purchase may also have an impact on the growing market for cloud-based gaming services, an area in which Microsoft is active through its subscription service, Xbox Game Pass.

Microsoft has announced a number of agreements in recent days, seemingly in an effort to dispel accusations that it would restrict game content from competitors. Microsoft announced this week that it has secured a 10-year agreement with Nintendo, guaranteeing the latter's access to Call of Duty for the foreseeable future.

An FTC lawsuit to stop the Activision deal, according to Microsoft's Smith in a Wall Street Journal op-ed published on Monday, would be a "huge mistake," and the acquisition would enable Microsoft to develop new features like the ability for users to play the same game on multiple devices, similar to how they can with streaming TV shows or music.

Microsoft issued an 11-point commitment regarding all of its app markets and its gaming division in February, several months earlier. The list included a commitment not to treat its own published games differently on digital platforms it manages, which would apply to the potential Activision agreement.

Washington (CNN)

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