The Federal Trade Commission (FTC) has filed a lawsuit to block Microsoft Corp from buying leading video game developer Activision Blizzard Inc (NASDAQ:ATVI), alleging that the $69 billion deal suppresses competition in the gaming industry.
In a complaint issued today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, the parent company of well-known game developer Bethesda Softworks.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition.
“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.”
READ: Microsoft's pursuit of Activision Blizzard could be blocked by FTC, according to Politico
The commission vote to issue the complaint was 3-1, with three Democrats in favor and one Republican against.
Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices.
But the FTC felt that could change if the deal is allowed to proceed.
"With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers," the FTC said in a statement
In response, Microsoft president and vice chair, Brad Smith, said: “We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers.”
We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers.
— Brad Smith (@BradSmi) December 8, 2022
"We have been committed since day one to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court" he said.
The deal is also already being probed by competition authorities in Europe and the UK.
Contact Jeremy at jeremy@proactiveinvestors.com