Topline
The Federal Trade Commission filed a lawsuit against Microsoft on Thursday to block its $69 billion acquisition of video game giant Activision Blizzard, arguing the company could stifle competition, as Microsoft looks to compete with gaming giants Nintendo and Sony.
The Federal Trade Commission filed a lawsuit to block Microsoft’s $69 billion acquisition of video … [+]
Key Facts
The FTC voted to file the suit blocking Microsoft’s biggest ever acquisition in a 3-1 vote on Thursday, with the commission’s three Democrats forming the majority.
The commission alleges the acquisition would unfairly lure consumers to Microsoft, the maker of video game console Xbox, allowing it to “suppress competitors to its Xbox gaming consoles and its rapidly growing content and cloud-gaming business.”
Activision Blizzard—the maker of the Candy Crush, as well as the franchises Call of Duty, Overwatch and World of Warcraft — is one of “only a very small number of top video game developers in the world” that creates high-quality games for multiple consoles, including Xbox primary rival PlayStation, according to the commission.
An acquisition could give Microsoft the “means and motive to harm competition” by degrading the quality of Activision’s games, changing its pricing or by withholding content from competitors, the commission alleges in the suit, which was filed in the commission’s in-house court, Bloomberg reported.
Activision shares fell more than 2% on news of the report to $74.69, well below the $95 per share price that Microsoft agreed to pay when it announced its plan to purchase the company in January.
Microsoft did not immediately respond to a request for comment from Forbes.
Tangent
The suit comes just two days after Microsoft offered Sony a 10-year contract to make Activision Blizzard’s Call of Duty releases available on PlayStation at the same time as Xbox, in an apparent move to curb antitrust fears around its purchase of Activision Blizzard. That offer was pending on the completion of its Activision Blizzard acquisition, and came one month after Politico reported an antitrust suit could be coming. Microsoft President Brad Smith, in response, argued the acquisition was “good for gamers,” in an opinion piece published in the Wall Street Journal.
Key Background
Microsoft announced in January it was planning to purchase the video game giant at $95 per share in an all-cash transaction, which would make Microsoft the third largest video game company in the country by revenue, behind Tencent (the owner of Riot Games) and Sony (which makes PlayStation). The announcement came as Activision Blizzard was being investigated by the Securities and Exchange Commission over workplace discrimination and as it faces multiple allegations of a “frat boy” culture that created a “breeding ground” for sexual harassment, leading to the resignation of executive J. Allen Brack last August.
Surprising Fact
Amazon reportedly pursued an acquisition of video game company Electronic Arts, known as EA (the maker of the EA Sports franchise), according to unnamed sources speaking to USA Today—although Amazon later clarified those reports were unsubstantiated and it was not planning to purchase EA.
Further Reading
FTC sues to block Microsoft’s acquisition of game giant Activision (Washington Post)
Microsoft Buying Activision Blizzard For Nearly $69 Billion—Will Be 3rd Largest Gaming Company (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2022/12/08/federal-trade-commission-sues-microsoft-to-block-69-billion-activision-purchase/