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FTC blocks Microsoft’s $68.7 billion bid to acquire CoD publisher Activision
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The Federal Trade Commission (FTC) of the US has issued a complaint to block Microsoft’s acquisition of leading gaming firm Activision Blizzard, the antitrust agency said on Thursday.
FTC argued that the deal will give Microsoft control over some of the top gaming titles, which they can use to “harm competition” in the gaming consoles, subscription, and cloud gaming market by manipulating prices, degrading game experience, and withholding content and games from rival platforms.
The agency voted 3 to 1 in favour of issuing the administrative complaint to block the deal. The allegations made in the complaint will now be presented in a formal hearing before an administrative judge.
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Microsoft made a $68.7 billion bid to acquire Activision Blizzard in January, making it one of the biggest acquisition bids ever in the gaming industry. The deal, if completed, would give the Xbox maker control over some of the most downloaded and played games in the world such as Call of Duty and Candy Crush. It would have also made Microsoft the third biggest gaming firm in the world after Sony and Tencent.
The FTC pointed out that Microsoft has shown anti-competitive behaviour with some of its previous gaming acquisitions. For instance, after acquiring Bethesda Softworks’ parent ZeniMax Media for $7.5 billion in March 2021, Microsoft made several of its gaming titles such as Starfield and Redfall exclusive to its own Xbox gaming consoles, despite giving assurance to European antitrust agencies that it will not block access to the games on rival consoles, added FTC.
“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,” said Holly Vedova, director, Bureau of Competition at FTC.
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The agency also argued that Activision is one of the few top video game developers in the world that develops and publishes games on multiple gaming platforms including consoles, PCs, and smartphones. “But that could change if the deal is allowed to proceed.”
FTC’s complaint is a setback for Microsoft which has been trying to win over rival gaming companies such as Sony with long-term access to Activision Blizzard’s games. Early this week, Microsoft executives said that they have agreed to make all new Call of Duty games available on Nintendo Switch gaming consoles for the next 10 years and a similar deal has been offered to Sony.
UK’s antitrust watchdog Competition and Markets Authority (CMA) also made similar allegations in September and said that it will open an in-depth investigation into the deal if Microsoft couldn’t address their concerns.
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