Federal Trade Commission sues to block Microsoft’s $69 billion takeover of video game company Activision Blizzard

The Federal Trade Commission on Thursday said it was suing to block Microsoft’s proposed $69 billion acquisition of video game company Activision Blizzard, saying it could stifle competitors for its Xbox gaming consoles and growing gaming subscription business.

The FTC voted 3-1 to file the complaint after a closed session, with the three Democratic commissioners voting in favor and the lone Republican voting against. A fifth seat on the panel is vacant after another Republican left earlier this year.

The FTC’s complaint cites Microsoft’s previous acquisitions of games, particularly well-known developer Bethesda Softworks and its parent company ZeniMax, as an example of where Microsoft has made some popular game titles exclusive despite assuring European regulators it had no intention of doing so.

“Microsoft has already demonstrated that it can and will withhold content from its gaming competitors,” said Holly Vedova, director of the FTC’s competition bureau, in a prepared statement. “Today, we’re trying to stop Microsoft from taking control of a leading independent games studio and using it to uncompetitively compete in several dynamic and fast-growing gaming markets.”

Microsoft President Brad Smith indicated in a statement Thursday that the company is likely to appeal the FTC’s decision.

“While we believed in giving peace a chance, we have full confidence in our case and welcome the opportunity to take our case to court,” Smith said.

The FTC’s challenge — which will be filed in an administrative court — could be a test case for President Joe Biden’s mandate to consider major tech mergers.

Microsoft had ramped up its public defense of the deal in recent days while awaiting a decision.

Microsoft announced the merger deal in January, but has faced months of opposition from Sony, maker of the rival PlayStation console, and has raised concerns with antitrust authorities around the world about blocking access to popular Activision Blizzard game franchises like Call of Duty to lose.

Biden’s antitrust authorities “have taken the view that merger policy has been too weak for decades, and they’ve repeatedly said, ‘We’re changing that,'” said William Kovacic, a former chairman of the FTC.

The goal is “not to allow shady deals and not accept flimsy settlements,” said Kovacic, who was appointed Republican commissioner by then-President George W. Bush in 2006. But he said trying to block that acquisition could trigger a legal challenge from Microsoft, which the company has a good chance of winning.

“It’s evident that the company has made a number of concessions,” he said. “If the FTC rejects Microsoft’s promises, Microsoft will likely take them to court and say the FTC is incorrigibly stubborn about it.”

Microsoft announced its latest promise on Wednesday, saying it would make Call of Duty available on Nintendo devices for 10 years should the acquisition go through. It has said it was trying to offer the same commitment to Sony.

The deal is also under scrutiny in the European Union and the United Kingdom, where investigations are not due to be completed until next year.

Copyright © 2022 by The Associated Press. All rights reserved.

https://6abc.com/federal-trade-commission-sues-to-block-microsoft-activision-blizzard/12545460/ Federal Trade Commission sues to block Microsoft’s $69 billion takeover of video game company Activision Blizzard

Alley Einstein

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