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The FTC Files a Lawsuit to Prevent the Microsoft/Activision Merger

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The Federal Trade Commission (FTC) filed a lawsuit to prevent Microsoft’s proposed $69 billion acquisition of Activision Blizzard.

The Federal Trade Commission voted 3-1 on Thursday to file suit against Xbox manufacturer Microsoft, alleging that Microsoft has the “means and purpose” to undermine competition by altering prices or decreasing the quality of Activision’s (ATVI) top games including Call of Duty, World of Warcraft, and Overwatch. The FTC issued a warning that Microsoft (MSFT) may restrict access to its content on non-Windows platforms.

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

This decision was the Commission’s primary emphasis during the Biden administration, and it was one of the toughest moves taken by federal authorities in decades to limit the influence of giant internet companies.

The FTC noted Microsoft’s history of censoring content from competitors, including the corporation’s planned 2021 acquisition of Zenimax Media Inc., the parent company of game developer Bethesda Softworks. Despite promising European antitrust authorities that it wouldn’t, Microsoft made a number of Bethesda games exclusive to Microsoft.

More than 400 million people are currently active users (MAU) of games published by Activision Blizzard across all gaming platforms.
The FTC claimed that Microsoft would be incentivized to remove Activision’s games from the Playstation because it is the only other high-performance game console available.

Microsoft’s Xbox Game Pass is the market leader in the subscription video game service industry, boasting 25 million users as of January of this year. While announcing its purchase of Activision, the company raised concerns from the FTC by suggesting it might make Activision games exclusive to Game Pass in an effort to increase subscription numbers.

Microsoft’s net income for the most recent quarter was $17.6 billion, down 14% year over year.
A better 12-month performance than the 30% decline in the Nasdaq Composite is seen in its stock price, which is down 26%.

Source Investopedia

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