FTC sues to block Microsoft’s acquisition of Activision Blizzard

The US Federal Trade Commission (FTC) has announced that it will be blocking Microsoft’s US$69bn acquisition of Activision Blizzard. The decision comes after the FTC stated that the acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business”.

It is learnt that Microsoft executives also met FTC Chair Lina Khan, and following a 3-1 vote the decision was taken. The FTC particularly highlighted Microsoft’s acquisition of ZeniMax, the parent firm of Bethesda Softworks, and how Microsoft tried to turn various Bethesda titles into Microsoft exclusives in spite of assurances that it would not have an incentive to withhold games from rival consoles.

The FTC believes that, should Microsoft be able to take over Activision’s titles, it could potentially harm the competition by degrading the quality of gameplay, manipulate the prices or degrade player experiences or rival consoles and gaming services. The FTC also believes Microsoft might withhold content from competitors entirely. 

Holly Vedova, director of the FTC’s Bureau of Competition, commented:

“Microsoft has already shown that it can and will withhold content from its gaming rivals. 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.“

Brad Smith, Microsoft’s vice chair and president, said:

“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers. We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.“

Microsoft, in January 2022, had announced that it would be buying Activision for reportedly US$68.7 billion, which would have been the biggest deal in the history of the gaming industry. Microsoft already owns the Xbox video game console system, while Activision is the developer of video game series such as World of Warcraft and Call of Duty.