Microsoft office building

FTC sues to block Microsoft’s acquisition of Activision Blizzard, crushing its metaverse ambitions

When Microsoft (NASDAQ: MSFT) announced it would be purchasing one of the biggest gaming companies in the world earlier this year, experts dubbed it the biggest bet on the metaverse since Meta (NASDAQ: META) announced its ambitions last year. Now, Microsoft’s metaverse ambitions have been dealt a heavy blow after the United States Federal Trade Commission (FTC) announced that it’s suing to block the acquisition.

Microsoft announced in January that it would be splashing $70 billion to acquire Activision Blizzard (NASDAQ: ATVI), the company behind Call of Duty, World of Warcraft, and Overwatch. The deal, which would be the largest in Microsoft’s and the gaming industry’s history, would give the software giant an edge in the metaverse world.

However, FTC has now filed a complaint seeking to block the deal. The agency pointed to Microsoft’s “record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks.”

FTC alleges that Microsoft ended up making most of Bethesda’s games exclusives on its Xbox consoles despite giving European antitrust bodies assurances that it would keep them available to rival consoles, including Sony’s PlayStation.

“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,” commented Holly Vedova, the Director of the FTC’s Bureau of Competition.

Microsoft, on its part, dismissed claims that the merger would be anti-competitive.

“We have been committed since Day One to addressing competitive concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” said Brad Smith, the company’s president.

At a time when Mark Zuckerberg has pivoted Facebook’s (now Meta) business model to focus on the metaverse, the Microsoft-Activision Blizzard deal was seen as the company’s response to Zuckerberg.

With titles like Call of Duty and World of Warcraft to its name, Activision offers some of the best virtual worlds today. Experts predicted that Microsoft would propel these games to a new level, finally integrating virtual reality concepts into these famous games.

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