FTC sues to block Microsoft-Activision Blizzard $69B merger

The Federal Trade Commission filed a lawsuit Thursday to block Microsoft’s planned $69 billion acquisition of video game company Activision Blizzard.

(For insights into emerging themes at the intersection of technology, business and policy, subscribe to our technical newsletter Today’s Cache.)

The FTC’s challenge could be a test case for President Joe Biden’s mandate to scrutinize major tech mergers. The committee voted 3-1 to file the complaint after a closed meeting, with the three Democratic commissioners voting in favor and the only Republican voting against.

The complaint cites Microsoft’s past game acquisitions, particularly of well-known developer Bethesda Softworks and parent company ZeniMax, as an example of where Microsoft is making a number of upcoming game titles exclusive to Xbox, despite assuring European regulators that it had no intention of doing so.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said a prepared statement from Holly Vedova, director of the FTC’s Bureau of Competition. “Today we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

The FTC said it filed the complaint through its administrative process rather than taking the case to federal court. An administrative judge will hear the evidence, but not until August 2023, the complaint said.

Microsoft president Brad Smith said in a statement Thursday that the company will likely challenge the FTC’s action.

“While we believed in giving peace a chance, we have complete confidence in our cause and welcome the opportunity to take our case to court,” Smith said.

Must Read  Microsoft prepares to go to battle with FTC over Activision deal

The company had stepped up its public defense of the deal in recent days pending a decision. Smith said Microsoft has made efforts to address competition concerns and submitted proposed concessions to the FTC earlier this week.

“We continue to believe this deal will increase competition and create more opportunities for gamers and game developers,” said Smith.

Microsoft announced the merger deal in January but has faced months of resistance from Sony, which makes the rival PlayStation console, and has raised concerns with antitrust watchdogs around the world about losing access to popular Activision Blizzard game franchises, such as the military shooter. Call of Duty .

Antitrust regulators under Biden “have expressed the view that merger policy has been too weak for decades and they have repeatedly said, ‘We’re going to change that,'” said William Kovacic, a former chairman of the FTC.

That has pressured the FTC to follow through on its bold promises to “not allow dodgy deals and not accept weak settlements,” said Kovacic, a Republican commissioner appointed in 2006 by then-President George W. Bush. But he said Microsoft has a good chance of winning its legal challenge.

“Obviously the company has made some concessions,” he said. “Microsoft would probably take them to court and say the FTC is incorrigibly stubborn on this.”

Microsoft announced its latest pledge on Wednesday, saying it would make Call of Duty available on Nintendo devices for 10 years if the acquisition goes through. It has said it was trying to make the same commitment to Sony.

Appealing to the Biden administration’s priorities, Microsoft had also sought to characterize its deal as labor-friendly after announcing a “labor neutrality agreement” in June with the Communications Workers of America that would allow employees to unite after the acquisition closes. Union president Chris Shelton penned an opinion column in The Hill this week calling on the FTC to “make the deal, not blow it.”

Must Read  2022 Holiday Gift Guide: Bluetooth Speakers

The deal is also being closely monitored in the European Union and the United Kingdom, where investigations will not be completed until next year.

The FTC’s decision to send the complaint to internal courts instead of seeking an urgent federal court order to halt the merger could drag the case on for months and give more confidence to authorities outside the US the deal on their own,” said Kovacic, who is now a professor at George Washington University Law School.

Activision Blizzard CEO Bobby Kotick said in a message to employees Thursday that the FTC’s action “sounds alarming, so I want to bolster my confidence that this deal will close.”

“The claim that this deal is anti-competitive does not match the facts, and we believe we will win this challenge,” Kotick wrote.

Kotick said the deal will be good for players, employees, competition and the industry.

“We believe these arguments will win despite a regulatory environment focused on ideology and misconceptions about the technology industry,” he said.

Headed by FTC Chair Lina Khan, a lawyer who advocates for tougher antitrust enforcement, the committee is made up of three Democrats and one Republican after a second Republican stepped down earlier this year and vacated a seat on the panel.

Democratic U.S. Senator Elizabeth Warren tweeted Thursday that she welcomed the FTC’s action, noting that she had urged Khan to take a closer look at the proposed merger.

“Corporate monopolies have had free rein to raise prices and hurt workers, but now the Biden manager is committed to promoting competition,” said Warren.

Must Read  Windows 10 And 11 Security Feature Alerts Bypassed By Attackers

Both the Justice Department and the FTC have this year looked at strengthening merger guidelines to better detect and prevent illegal and anti-competitive deals.

Federal regulators also opened their campaign on Thursday to block Facebook parent Meta’s acquisition of a virtual reality company in a courtroom in San Jose, California, on Thursday.

In that case, the FTC filed a lawsuit to prevent Meta’s acquisition of Within Unlimited and its fitness app Supernatural, claiming it would harm competition and violate antitrust laws.

Microsoft has largely escaped the more intense regulatory backlash that its tech rivals like Amazon, Google, and Meta have endured in recent years. But the sheer size of Activision Blizzard’s acquisition — which could be the most expensive in tech industry history — has drawn attention.

Microsoft’s last major antitrust battle came more than two decades ago, when a federal judge ordered its dissolution following the company’s anti-competitive actions against its dominant Windows software. That verdict was overturned on appeal, although the court imposed other, less drastic sentences on the company.

Similar Articles



Please enter your comment!
Please enter your name here

About Us

Ahfeed.com provides you with the latest entertainment blogs, technology, top news, and sometimes sports news and other latest news. With the increase in technology all want relevant and exact information about the blog. So, our aim is to provide clear-cut information about the articles to make your day happy and bind more and more users to the side of all topics covered in entertainment. Contact us : ahfeed.com@gmail.com

Follow us


Most Popular