Initially announced in January 2022, Microsoft's plan to acquire gaming giant Activision Blizzard for nearly $69 billion has sparked waves worldwide as one of the most significant acquisitions in the decade. However, this acquisition might not go through as the Federal Trade Commission (FTC) is reportedly looking to file an antitrust lawsuit to stop the merger from happening.
According to Politico, Microsoft might be challenged by the FTC and blocked in its acquisition of Activision Blizzard, the creators of several prominent games and franchises, including Call of Duty, Diablo, World of Warcraft, Candy Crush, and more. This report follows ongoing investigations concerning speculation that Microsoft's acquisition of Activision Blizzard could have "anticompetitive effects."
"The Federal Trade Commission is likely to file an antitrust lawsuit to block Microsoft’s $69 billion takeover of video game giant Activision Blizzard [...] according to three people with knowledge of the matter," noted Politico reporter Josh Sisco.
Noteworthy, the lawsuit challenging Microsoft's deal with Activision Blizzard isn't set in stone, as FTC's four commissioners have yet to vote out a complaint or meet with lawyers for the companies. However, "FTC staff reviewing the deal are skeptical of the companies' arguments."
The FTC's investigation into the merger remains ongoing, but most of the depositions have been conducted, including those with Microsoft's chief executive Satya Nadella and Activision's head Bobby Kotick. However, if the antitrust lawsuit moves forward, it "could come as soon as next month."
According to Politico, if this lawsuit goes through, it would be the "FTC's biggest move yet under Chair Lina Khan to rein in the power of the largest technology companies." More specifically, it means that Microsoft would need to endure many more weeks of legal battles and processing to acquire Activision Blizzard. It could also result in their acquisition falling short, potentially leaving a stain on Microsoft's track record and putting them at a disadvantage against Sony Interactive Entertainment.
According to Politico, "Central to the FTC's concerns is whether acquiring Activision would give Microsoft an unfair boost in the video game market. Microsoft’s Xbox is number three to the industry-leading Sony and its PlayStation console. Sony, however, has emerged as the deal’s primary opponent, telling the FTC and regulators in other countries that if Microsoft made hit games like Call of Duty exclusive to its platforms, Sony would be significantly disadvantaged."
In Microsoft's response to the Competition and Markets Authority, the company stated that Sony had better games than Xbox and admitted PlayStation's exclusives were "better quality" than its competitors. In addition, Microsoft reassured Sony that this acquisition wouldn't disadvantage them significantly.
Subsequently, Activision Blizzard "won't hesitate to fight to defend the transaction if that's needed." Activision Blizzard's executive vice president for corporate affairs and CCO Lulu Cheng Meservey said on Twitter, "[I'm] seeing a lot of speculation about Microsoft's acquisition of Activision Blizzard. Any suggestion that the transaction could have anticompetitive effects is absurd. This merger will benefit gamers and the US gaming industry, especially as we face stiffer competition from abroad."
"We're committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won't hesitate to fight to defend the transaction if that's needed," added Cheng Meservey.
We're committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won't hesitate to fight to defend the transaction if that's needed.— Lulu Cheng Meservey (@lulumeservey) November 24, 2022
So far, it seems Sony is attempting to stop the acquisition from happening, and the FTC's antitrust lawsuit could make that possible. Until more information becomes apparent, it's safe to assume Microsoft will continue encountering trouble along the way. However, the antitrust lawsuit isn't set in stone yet.
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Featured image courtesy of Microsoft / Xbox and Activision Blizzard.