Microsoft Responds To FTC, Says Activision Deal Won't Hurt Competition

On 22 December 2022, tech giant Microsoft appealed to the U.S. Federal Trade Commission (FTC) to allow its $69 billion acquisition of game publisher Activision Blizzard to proceed, arguing that the merger wouldn't hurt competition in the industry. Furthermore, the company claimed that it was not the top console company and that its acquisition of Activision aimed to grow Xbox's visibility in the mobile games market, which it said had "next to no presence."

This latest action came after the FTC filed an antitrust lawsuit to block the deal two weeks ago, on 8 December 2022, alleging that the merger would violate federal laws. In particular, the FTC raised its concerns that Microsoft could inflate prices or make it more challenging for people to access Activision's games if they didn't use Microsoft hardware or subscribe to its services, potentially going as far as blocking their access to games altogether.

The suit also drew attention to Microsoft's track record of "taking control of valuable gaming content," arguing that the software giant would have "the ability and increased incentive to withhold or degrade Activisions content in ways that substantially lessen competition."

In their independent submissions to the FTC, Microsoft and Activision both argued that the FTC was "blinded by ideological skepticism of high-value technology deals and by complaints from competitors" and that the "acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry."

"That is particularly so when the manufacturer has made clear it will not withhold the game. The fact that Xbox's dominant competitor has thus far refused to accept Xbox's proposal does not justify blocking a transaction that will benefit consumers. Giving consumers high-quality content in more ways and at lower prices is what the antitrust laws are supposed to promote, not prevent," Microsoft noted.

The software giant said it will continue to challenge the FTC's lawsuit ahead of its pledged acquisition of Activision by 30 June 2023. The case will go to trial in the FTC administrative court on 2 August 2023, with regulators in the United Kingdom and the European Union anticipated to release their rulings sometime in Q1/Q2 2023. To the best of our knowledge, only regulators in Brazil and Saudi Arabia have approved the merger thus far.

We will endeavor to update you regarding further developments related to this case.