FTC wants to pause Microsoft's Activision Blizzard mega-takeover

Watchdog answers its call of duty, fears serial monopoly abuser will strike again

The Federal Trade Commission filed a lawsuit on Thursday seeking to block Microsoft's $69 billion acquisition of video game studio Activision Blizzard, claiming the merger would suppress competition.

The Windows giant announced plans to scoop up Activision, the makers of the popular Call of Duty and World of Warcraft franchises, when the games developer was battling a public image crisis. Activision was sued and accused of supporting a toxic "frat boy" workplace culture. 

Top execs at the studio resigned, workers fought to unionize, all while its longtime mega-rich CEO promised to cut his salary until he cracked down on sexual harassment and boosted diversity in the workplace. Enter Microsoft, who promised to make everything all right again. 

"We … believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect," Microsoft Gaming CEO Phil Spencer, said back in January when the takeover was proposed. "We hold all teams, and all leaders, to this commitment. We're looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard."

Regulatory bodies like the FTC and European watchdogs started probing the impact of the proposed acquisition. Meanwhile, Microsoft launched a campaign trying to push the deal forward by publishing op-eds in the Wall Street Journal, meeting with lawmakers, and signing an ten-year agreement to publish Call of Duty for Nintendo consoles, such as the Switch. 

Officials at the FTC, however, remained unconvinced Microsoft would keep its promise of releasing Activision's games across multiple consoles competing with the Xbox. As such, the regulator – led by Big Tech arch-critic Lina Khan – has filed suit in an attempt to block the takeover.

"Microsoft has already shown that it can and will withhold content from its gaming rivals," Holly Vedova, Director of the FTC's Bureau of Competition, said in a statement.

"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."

Activision's most popular games are played by hundreds of millions of people around the world on various platforms, including PCs, mobiles, and video game consoles. The FTC believes Microsoft could make its games exclusive to its own platforms, such as the Xbox console line, forcing gamers to stick to its products and services, if it were allowed to take over Activision. 

"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 agency claimed.

Commissioners voted 3-1 (Three Dems to one Republican) to block Microsoft's Activision deal; Christine Wilson voted no.

In a statement to The Register, Microsoft President Brad Smith told us today:

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 believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.

The Register has asked Activision for further comment. ®

 

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