NEW YORK - The Federal Trade Commission (FTC), in one of the most aggressive actions taken by federal regulators in decades to check the power of the tech industry’s giants, has sued to block Microsoft’s US$69 billion (S$93 billion) acquisition of video game maker Activision Blizzard.
The FTC on Thursday (Dec 8) said that the deal would harm consumers because Microsoft could use Activision’s blockbuster games such as Call of Duty to lure gamers from rivals.
The agency’s commissioners voted 3-1 to approve filing the suit.
The decision is a blow to the expansion of Microsoft’s video game business, which has become its most important consumer unit and topped US$16 billion in annual sales during the most recent fiscal year.
Microsoft’s acquisition of Activision would be the largest consumer technology deal since AOL bought Time Warner two decades ago. It would marry Microsoft’s Xbox console and game streaming service, which many consider gaming’s future, with Activision titles such as Call of Duty and Candy Crush. The scale of those games is enormous: Activision says it has almost 370 million active users each month.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Microsoft indicated it would not abandon the deal and would fight in court to keep the acquisition alive.
The deal between Microsoft and Activision has been under review by 16 regulators around the world, but the FTC is the first of three key regulators, including in Britain and the European Union, to reach a decision on the acquisition.
Microsoft has argued that the deal benefits consumers because Microsoft could make Activision’s broad library of games available to more people on different platforms and as part of a bundled subscription to Xbox Game Pass, its Netflix-like streaming offering, instead of downloading and buying each game individually.
But the FTC said customers would be harmed because Microsoft could misuse Activision’s hugely popular games to its advantage, by withholding them from competitors such as Sony or leveraging them to get an upper hand as more gaming is streamed online by harnessing the power of Microsoft’s data centers.
Legal experts said the case could be challenging for the FTC to win because Microsoft and Activision do not really play in the same industry, reducing potential monopoly concerns. But the FTC may be trying to pressure European regulators to step up, while making it more difficult for the companies to complete their deal.
The lawsuit follows a final scramble by Microsoft to assuage regulators’ concerns.
In mid-November, Microsoft offered Call of Duty to Sony for 10 years, significantly longer than in a previous offer. On Monday, Smith, who leads Microsoft’s lobbying operations, said in a Wall Street Journal opinion piece that the company was “open to providing the same commitment to other platforms and making it legally enforceable by regulators in the US, UK and European Union.” NYTIMES
