FTC blocks Microsoft’s acquisition of game developer Activision Blizzard

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The Federal Trade Commission (FTC) is pushing to halt Microsoft’s (NASDAQ: MSFT) attempt at purchasing video game developer Activision Blizzard (NASDAQ: ATVI) and its franchises on the grounds that it may stifle competition in the industry.

#BREAKING: FTC seeks to block Microsoft Corp.’s acquisition of Activision Blizzard, Inc.: https://t.co/ukewjn6MUX /1

— FTC (@FTC) December 8, 2022

Microsoft’s deal with Activision is worth a staggering $69 billion, making it the largest acquisition deal in the gaming industry. The move will give Microsoft direct control over Activision’s franchises like Call of Duty, Overwatch, and Diablo, but the FTC argues that it may hinder fair competition in high-performance gaming consoles.

In the official complaint, the FTC highlights Microsoft’s unhealthy record of suppressing competition from its rivals. Microsoft owns Xbox consoles, and there is a palpable fear in the gaming industry that the technology company may limit Activision games to only Xbox consoles.

The FTC cited Microsoft’s purchase of ZeniMax, the parent company of Bethesda Softworks, and the decision to make several gaming titles from the industry exclusive to the Xbox. Microsoft reportedly gave assurances to European anti-trust authorities that it would not withhold gaming titles from rivals but reneged on the agreement.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” FTC Director Holly Vedova said. “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.”

The Commission voted 3-1 in favor of issuing the public complaint, noting that the issuance marks the start of proceedings before an administrative judge.

“With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers,” the FTC said.

The FTC is pushing hard against big tech

Meta’s (NASDAQ: META) plans to expand into the metaverse received a kick back from the FTC as the Commission filed a lawsuit against the firm. The anti-trust regulator said that the purpose of the suit was to stop Meta from “its ultimate goal of owning the entire metaverse.”

The court filing noted that if Meta is allowed to buy Within, a fitness company building virtual realities, “competitive pressure will slacken.” Meta’s previous purchases of Instagram and Whatsapp were cited as proof of the firm’s unhealthy ambitions.

At the moment, Meta’s CEO, Mark Zuckerberg, is set to take the stand while CTO Andrew Bosworth, and Within founder Chris Milk are also expected to testify in court.

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