On Thursday, the Federal Trade Commission filed a lawsuit in an effort to prevent Microsoft from acquiring video game developer Activision Blizzard in a deal valued at $69 billion. This lawsuit was one of the most aggressive actions taken by federal regulators in decades and was part of an effort to curb the power of the giants that dominate the technology industry.
According to the Federal Trade Commission (FTC), consumers would be harmed by the merger because Microsoft could utilise Activision’s popular titles like Call of Duty to entice players away from other platforms. The filing of the complaint was given the go light by the agency’s commissioners with a vote of 3 to 1 in favour of it.
The move deals a severe damage to the development of Microsoft’s video game business, which has become the company’s most significant consumer operation and had annual revenues of more than $16 billion during the most recent fiscal year. For the Chairwoman of the Federal Trade Commission, Lina Khan, a legal scholar who rose to prominence after writing an essay attacking Amazon, the case will test whether or not her ambitious strategy to rein in the dominance of Big Tech will survive in the courts.
If Microsoft were to acquire Activision, it would be the greatest transaction involving consumer technology since AOL purchased Time Warner over twenty years ago. It would combine popular Activision games like Candy Crush and Call of Duty with the Xbox system and game streaming service offered by Microsoft, which is widely seen as the future of gaming.
Microsoft gave the impression that it would not back out of the transaction and would instead pursue legal action to preserve the purchase.
According to a statement released by Microsoft, President Brad Smith stated that the company “continues to think that this arrangement will enhance competition and generate more options for gamers and game creators.” “We have been committed since day one to addressing competition concerns, including by offering earlier this week proposed concessions to the F.T.C. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
There have been a total of sixteen regulatory bodies around the world looking into the acquisition that Microsoft is planning to make of Activision, but the Federal Trade Commission is the first of three key regulatory bodies, including those in Britain and the European Union, to make a decision regarding the acquisition.
Microsoft has argued that the deal is beneficial to consumers because it will allow it to make Activision’s extensive library of games available to a greater number of people on a variety of platforms and as part of a bundled subscription to Xbox Game Pass, its streaming offering that is comparable to Netflix.
The Federal Trade Commission, however, stated that customers would suffer as a result of Microsoft’s potential to take unfair advantage of Activision’s immensely popular games. Microsoft could do this by either keeping these games from competitors like Sony or utilising them to gain an advantage as more gaming is streamed online by utilising the power of Microsoft’s data centres.
According to the opinions of several legal experts, it may be difficult for the F.T.C. to prevail in this case since Microsoft and Activision do not genuinely compete in the same field, which reduces the likelihood of monopoly issues. However, it is possible that the F.T.C. is attempting to put pressure on European authorities to increase their oversight while simultaneously making it more difficult for the businesses to finalise their acquisition.
In the middle of November, Microsoft made Sony an offer to licence Call of Duty for a period of 10 years, which is a major extension over the prior offer. In an opinion piece published by the Wall Street Journal on Monday, Mr. Smith, the president of Microsoft and the person in charge of the company’s lobbying operations, stated that the company was “open to providing the same commitment to other platforms and making it legally enforceable by regulators in the United States, the United Kingdom, and other countries.” as well as the European Union.”
Microsoft announced late Tuesday night that it had reached a deal to bring the Call of Duty franchise to Nintendo’s Switch devices — where the games are not currently available — for a period of ten years if the acquisition of Activision is finalised. The announcement was made in an effort to assuage the concerns of regulatory authorities.
Microsoft has also taken an aggressive stance against Sony, which has established itself as the principal opponent of the Activision acquisition over the course of the last several months. Sony, the company that creates the widely popular PlayStation video game console, stated to the British regulators that the acquisition would place crucial games “under Microsoft’s sole control, giving it an unprecedented content advantage,” and that Microsoft had not offered to make Call of Duty available on Sony’s game streaming service. Sony’s statement was made in response to the fact that Microsoft had not offered to make Call of Duty available on Sony’s service.
Microsoft has publicly poked fun at its opponent, notably in a tweet that was made on Twitter by Mr. Smith on Tuesday night, just after the announcement that they had reached an agreement with Nintendo.
Call of Duty has been referred to be “one of the greatest entertainment properties on the world” by Phil Spencer, who is the chief executive officer of Microsoft’s video game division.