This lawsuit could stop Microsoft from acquiring Activision Blizzard

Date:
Fri, 09 Dec 2022 16:08:29 +0000

Description:
The Federal Trade Commission has filed a complaint that looks to block Microsofts acquisition of Activision Blizzard.

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The Federal Trade Commission (FTC) has filed a lawsuit in an effort to block Microsofts planned acquisition of Activision Blizzard.

Back in January, Microsoft announced its plans to buy Activision Blizzard , but according to a press release issued by the US watchdog , the FTC claims that Microsofts proposed acquisition of the Call of Duty publisher would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

The redacted complaint itself claims that the merger would substantially lessen competition or tend to create a monopoly in multiple markets. In laymans terms, it could give Microsoft control over certain markets due to a lack of competition.

Not only does the FTC fear the acquisition creates increased incentive to use [Microsofts] control of Activision titles to disadvantage Microsofts competitors, but the complaint also details concerns for Microsofts potential to manipulate markets in the long-term by adjusting Activisions price points. Microsoft has already announced plans to hike the price of Xbox exclusives in 2023.

The suit is a critical hurdle in Microsofts acquisition of Activision Blizzard, and it could wind up putting a stop to its proposed purchase altogether. (Image credit: Shutterstock / Alex Van Aken) Much ado about everything

In recent years, Microsoft has loosened the company purse strings considerably; its offer of an eyewatering US$68.7 billion for the Call of
Duty publisher is just the tip of the iceberg. The suit brought forward by
the FTC highlights Microsofts more recent acquisitions as a cause for
concern, should its proposed Activision Blizzard acquisition go ahead.

Microsofts past conduct provides a preview of the combined firms likely plans if it consummates the Proposed Acquisition [of Activision-Blizzard], despite any assurances the company may offer regarding its plans, the complaint
reads.

Its acquisition of triple-A studio Bethesdas parent company, ZeniMax, is used as an example. It was a highly-controversial purchase, but the FTC references how Microsoft told the European Commission (EC) that they would not have the incentive to withhold ZeniMax titles from rival consoles.

But, shortly after the EC cleared the transaction, Microsoft made public its decision to make several of the newly acquired ZeniMax titles, including Starfield , Redfall, and Elder Scrolls 6 , Microsoft exclusives.

This means that despite Microsofts assurances to the EC, and with pressure
for Starfield to be a platform seller as the first Bethesda creation under Microsoft, the studios upcoming titles will not be debuting on rival consoles the PS5 or Nintendo Switch after all. We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers. December 8, 2022 See more A united front

Microsoft President Brad Smith has publicly responded to the suit on Twitter
, specifically addressing the concerns of the FTC regarding Microsofts potential use of the merger as a major market disruptor that could cut off their competitors at the source.

We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers, his first comment reads.

While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court, Smith stated in a follow-up Tweet .

Activision Blizzard has also publicly responded to the suit, with CEO Bobby Kotick news issuing a letter to employees and addressing some of the claims made in the suit.

I want to reinforce my confidence that this deal will close, Kotick says, echoing Smiths sentiment. The allegation that this deal is anti-competitive doesn't align with the facts, and we believe well win this challenge.

Kotick then seems to address the FTC indirectly, issuing his vote of confidence in the merger:

We believe these arguments will win despite a regulatory environment focused on ideology and misconceptions about the tech industry. (Image credit: Microsoft) What's next for Microsoft?

Following a vote, the FTC agreed three to one that it would be taking Microsoft to court. However, the lawsuit shouldnt be taken as a surefire sign that the deal will be blocked from completion. While these can cause a
general slowdown of proceedings, they dont represent a done deal.

The FTCs concerns aren't the first, either. Earlier this year, Microsoft
faced similar concerns from the UK-based Competition and Markets Authority, who claimed that the merger might harm Sony by withholding key titles from
the rival console. This shows its not just the FTC that is suspicious of Microsoft, as the proposed purchase is undergoing careful examination by international regulatory bodies.

In terms of the FTC filing, Microsoft will have a chance to defend its position in court. At the time of writing, no court dates have been
disclosed. These are the best games to get for your Xbox Series X.



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Link to news story: https://www.techradar.com/news/this-lawsuit-could-stop-microsoft-from-acquirin g-activision-blizzard


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