Microsoft Corp.’s acquisition of gaming publisher Activision Blizzard has come under the scanner of the US Federal Trade Commission. The $69 billion deal between the gaming publisher and Xbox maker is seen as harming competition under the FTC antitrust laws.
The FTC voted 3:1 in favor of a complaint filed in its in-house court. The regulators feel that the ownership of Activision by Microsoft will hurt the $200 billion gaming market, where rivals could be hurt with limited access to Activision’s biggest games. The deal will make Microsoft the third largest gaming player after Tencent holdings and Sony Group.
Speaking on anonymity, an FTC official said it was concerned that Microsoft would delay or deny access to Activision Blizzard’s popular games to rivals. It can also hamper cloud-based gaming and subscription services, which are still developing.
Exclusive Ownerships to Titles
The proposed acquisition of Activision by Microsoft is the largest transaction for the company and one of the top 30 acquisitions of all time. The ownership will give Microsoft some of the most popular games franchises, such as World of Warcraft and Call of Duty. Microsoft already owns the Minecraft virtual world-building game and the halo Franchisee.
Microsoft shares rose to $247.40, up 1.2% Thursday. Activision shares fell to $74.76, down 1.5% after an intraday decline of 3.9%.
CEO of Activision, Bobby Kotick, assured the employees that the deal would go through.
The in-house trial by FTC is scheduled to commence on August 2 next year. Activision and Microsoft said the deal would be completed by June 30, 2023, before Microsoft’s fiscal year’s end. The FTC will have to file a separate suit in the federal court to stop the deal from closing before the in-house trial is over.
FTC will announce the lawsuit that Microsoft decided to make two new titles by Bethesda Softworks, a new unit acquired by them as exclusive to its platform. This is despite the company’s assurance to EU regulators that it will not withhold the titles from rival consoles.
Aggressive FTC
Lina Khan, who was appointed as FTC chair by President Biden in June 2021, has been aggressive against mergers, especially big tech firms. The
FTC killed mergers between Aerojet Rocketdyne Holdings Inc. and Lockheed Martin Corp. and also the bid by Nvidia Corp to buy out Softbank Group’s arm.
On Thursday, the FTC heads to San Jose, California’s Federal Court, to block an acquisition of a virtual reality start-up by Meta Platforms. Microsoft announced on Tuesday it would allow the Call of Duty games on Nintendo’s console and the gaming platform Steam PC. It also proposed that the Call of Duty game could be on Sony PlayStation for the next ten years. Sony has, however, rebuffed the offer, and they have objected strongly to the Activision acquisition because of concerns that Microsoft will make Call of Duty exclusively its gaming services.
According to Joost Van Dreunen, a Stern School of Business, New York University teacher, and a video games expert, antitrust officials such as the FTC have become skeptical of promises made by tech companies on future behavior.
