This Federal Trade Commission (FTC) is seeking to block Microsoft’s acquisition of Activision Blizzard.
The FTC, an independent agency of the U.S. government, claimed the $69 billion deal would allow Microsoft to crush rivals for its Xbox gaming console.
In a complaint published on Dec. 8, the FTC pointed to Microsoft’s “record of acquiring and using valuable gaming content to suppress competition from rival consoles.” In particular, the agency noted that Microsoft acquired Bethesda’s parent company, ZeniMax, and decided to make some of the studio’s games exclusive to PC and Xbox. Microsoft did so despite “assurances” to European antitrust authorities that it “has no incentive to withhold games from rival consoles,” citing Starfield and Redfall in particular.
“Microsoft has demonstrated that it can and will withhold content from its gaming competitors,” said Holly Vedova, director of the FTC’s Bureau of Competition. control of the gaming industry and use it to the detriment of competition in multiple dynamic and fast-growing gaming markets.”
Last year, Microsoft revealed that “some” of Bethesda’s new games would be exclusives, but it never said whether those titles would eventually come to PlayStation or Switch. And the company has never said outright that “all games” will be excluded from rival systems. This is where the FTC strays a bit.
Microsoft never actually “assured” the European Commission that Bethesda and other Zenimax games would not be exclusive. In fact, the statement made to the committee was that future decisions on whether to distribute Zenimax games for other consoles will be made “on a case-by-case basis,” taking into account player needs and emotions. Factors influencing Microsoft’s future gaming decisions include consumer demand and preferences, as well as “the willingness of third parties to partner with Microsoft to release games for their devices.” That would put the ball in Sony’s and Nintendo’s courts.
Also, when Microsoft announced that Starfield and Redfall would be exclusive to Xbox and PC, the announcement was in line with its statement at the close of the ZeniMax deal. It also reiterated that “some new games in the future” will be exclusive to Xbox and PC players, rather than all titles.
as far as call-of-duty and blizzard games As far as Bethesda games go, Microsoft has repeatedly said it doesn’t intend to make any existing titles Xbox exclusives. This includes Microsoft’s repeated assertion that the Call of Duty franchise will not be shut out of the PlayStation platform, even proposing a deal to bring the series to Switch and keep it on PlayStation for at least 10 years.
As it relates to Call of Duty, the FTC is concerned that if the acquisition goes ahead, Microsoft will “have the means and incentive to harm competition” given its control of the Activision Blizzard franchise. The committee believes the company will do this by “manipulating pricing, degrading the quality of Activision’s games or the player experience on rival consoles, changing the terms and timing of access to Activision content, or rejecting competitor content entirely.” a little.
So, does that mean the deal is off the table? Not only that. The commission will only lodge an administrative complaint if it has “reason to believe” that the law has been or is being violated. The release of the administrative complaint marks the beginning of a proceeding in which the allegations will be heard in a formal hearing before an administrative law judge.
Activision Blizzard CEO responds to FTC’s planned lawsuit to block merger bobby kotick He said that while the committee’s move sounded “worrying”, he was confident a deal would be done.
“The allegations that this deal is anti-competitive are untrue, and we believe we will win this challenge,” Kotick said. “The competitive landscape is changing and, in short, a Microsoft-ABK merger will benefit players, employees, competition, and the industry as a whole.
“While the regulatory environment focuses on ideology and misconceptions about the tech industry, we believe these arguments will prevail.”
This American Communications Worker (CWA), a union representing the communications and information industries, news media and others, had this to say about the FTC lawsuit.
“By filing a lawsuit in administrative court to block Microsoft’s acquisition of Activision Blizzard, the FTC missed an opportunity to demonstrate that it takes the merger’s impact on the workforce seriously.
“Instead, the FTC once again focused its analysis solely on harm to consumers, in this case console market leader Sony’s concerns about increased competition.”
CWA sees the acquisition as a benefit to employees currently working at Activision Blizzard, as it says the company opposes employees’ efforts to organize freely and fairly. When Microsoft announced it was buying the company, it agreed to negotiate a legally binding agreement with the CWA to demonstrate to regulators a good-faith effort to address monopoly harm.
The CWA said approving the merger despite a collective bargaining agreement with Microsoft would “send a game-changing message to corporate America that workers do have a place at the table and that their concerns matter and must be addressed.”
“We think the FTC case is unlikely to convince a federal judge, especially as the European Commission is likely to approve the deal, and Activision Blizzard employees will finally have the opportunity to unionize to improve wages, benefits, and working conditions”
While Microsoft had hoped to close the deal by the end of its fiscal year in July 2023, the FTC has scheduled a hearing with an administrative law judge for August 2023.
We will closely monitor the development of the situation.
