Microsoft’s purchase of Activision is in danger: the FTC wants to block it for monopoly

The Federal Trade Commission (FTC) filed a lawsuit Thursday at to block the acquisition by Microsoft by video game publisher Activision Blizzard for $69 billion. It’s because they feel they would nurture a monopoly.

The FTC then said the massive deal would allow the tech giant to put down its gaming competitors. Activision owns hugely popular titles like Candy Crush Y call of Dutyand its acquisition could increase Microsoft’s competition with Japanese console makers Nintendo and Sony.

The lawsuit represents the FTC’s most significant effort to curb consolidation in the tech sector since prominent tech critic Lina Khan became chair of the commission and was expected to usher in a new era of antitrust enforcement characterized by a willingness to take cases to court rather than seek settlements with companies.

The question of ftc extension against Microsoft could hinder the company’s ambitions to become a true giant in the sector. The committee decided Thursday in a party-line vote to table the case in an administrative court, with all three Democrats in favor of the cause and one Republican against.

Microsoft hadn’t seen such an dire regulatory threat to its business in more than two decades, when the Justice Department filed a landmark antitrust lawsuit against the company that ensnared it in years of legal battles.

After that case settled in 2002, Microsoft had largely avoided the antitrust glare focused on tech rivals like Facebook, Google, Apple and Amazonall the way to the proposed acquisition of Activision, the largest deal in Microsoft’s history.

The purchase intention: a brutal merger

Since announcing its intention to buy Activision in January, Microsoft has announced a series of policies and agreements intended to demonstrate to regulators that the deal would not give it an unfair advantage in the gaming market or It would harm the workers.

When it was evident on Tuesday that the agency was about to make a decision on whether or not to stall the deal, Microsoft announced it would bring the Call of Duty franchise to nintendoswitch, an Xbox rival. He had previously said that “Call of Duty” would be available on the Sony Playstation.

Microsoft Chairman Brad Smith anticipated the company’s defense in a Wall Street Journal op-ed this week, warning that an FTC lawsuit against the deal”would harm competitionconsumers and thousands of game developers.”

Activision currently makes its popular games available to 154 million monthly active users worldwide on a variety of video game consoles, computers, phones and tablets, according to an FTC press release on the complaint.

But the FTC argues that if the deal goes through, that could change. Microsoft would have the ability to thwart competitors by denying these games entirely to competing game systems or by manipulating prices and degrading game quality on rival consoles.

Advantage over the competition

Therefore, the lawsuit warns that the settlement could not only give Microsoft an advantage in consoles, but also an unfair advantage in more emerging games, such as games for subscription and cloud gamingaccording to an FTC official, who spoke on condition of anonymity to the Washington Post.

Microsoft’s gaming business Xbox earned $3.6 billion in the quarter ended September. Xbox consoles trail rival Japanese console makers Sony and Nintendo in sales, the company told a British antitrust watchdog in October.

“Microsoft has a history of acquiring game content and then using it to squash competition from rival console makers, according to the ftc extensionthe Post said. The agency cited Microsoft’s acquisition of game developer Zenimax, saying the company subsidiary has made titles including Starfield and Redfall exclusive to Microsoft devices despite earlier assurances to European regulators.

“Microsoft has already shown that it can and will hold back content from its gaming rivals,” Holly Widow, director of the FTC’s Office of Competition, said in a press release. “Today we seek to prevent Microsoft from gaining control of a major independent game studio and using it to hurt competition in multiple markets. of fast-growing and dynamic games.

The European Union announced last month that it had opened an investigation into the deal, warning that Microsoft “may block access” to Activision games.