Video game players sue to frag Microsoft-Activision merger

Redmond accused of monopolising a market! How shocking

First the FTC threw a legal wrench in the works, and now a group of gamers has filed a class action lawsuit in California to stop Microsoft from purchasing Activision Blizzard.

It seems Redmond just can't catch a break in its attempts to close a $69 billion acquisition of the World of Warcraft maker, which 10 gamers claim [PDF] would violate section 7 of the Clayton Act, which prohibits mergers that would substantially lessen competition.

The gamers argue that Microsoft and Activision Blizzard are significant rivals in the video game development, publishing and distribution markets, and that the purchase would harm free-market competition. 

"The proposed acquisition may give Microsoft far-outsized market power in the video game industry and may enable Microsoft to foreclose rivals to critical inputs and important markets," the defendants said in the suit.

The consolidation would make it the third-largest gaming company by revenue in the world, as Microsoft has previously purchased 24 different gaming studios, including Minecraft maker Mojang Studios, KotOR makers Obsidian Entertainment and Hellblade maker Ninja Theory. 

Activision Blizzard, the suit points out, is itself a large conglomerate that was formed through Activision's purchase of WoW, Starcraft and Overwatch maker Blizzard, along with mobile game giant King, Call of Duty maker Raven Software and others.

The suit claims the merger would lessen competition across a range of product markets, including PC, console and mobile games, which it defines as separate "relevant product markets." The suit does the same for triple-A games, game subscription services, console hardware and "high-performance" console systems.

All of those markets, the plaintiffs claim, could end up suffering as a result of the Microsoft and Activision merger, and in turn that suffering could be passed onto them, and someone really needs to think of the gamers. 

The suit claims "higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects, [would] deprive the Plaintiffs, and the public at large, of the salutary benefits of competition."

It'll hurt the industry, too, of course

The suit also claims that employees in the video game industry would be harmed by the merger because Microsoft would also have "outsized market power in hiring and retaining employees in the video gaming field, which requires specialized talent."

Given the recent lawsuits that Microsoft has faced over sexual harassment allegations, and Activision Blizzard's problems with the same, the suit said the court should be concerned about giving such hiring power to companies with their histories. Not to mention tech companies colluding to drive down wages and hiring key staff.

This, of course, is all predicated on whether the FTC's recently-filed lawsuit to stop the merger is successful, or whether the European Union's investigation into the merger shows merit to put a permanent stop to it.  

The actions by the FTC and EU were both justified along antitrust grounds similar to those deployed by the group of disgruntled gamers. Microsoft has predictably argued the acquisition would give gamers more options, though that doesn't appear to have had much effect on the FTC.

The agency filed its lawsuit to block the merger not long after Microsoft president Brad Smith published an op-ed in The Wall Street Journal, in which he ominously said blocking the acquisition "would be a huge mistake." ®

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