FTC Seeks to Block Microsoft’s $69 Billion Acquisition of Activision Blizzard

The Federal Trade Commission (FTC) in the United States has sued Microsoft to block its acquisition of Activision Blizzard worth up to $69 billion, thereby questioning one of the largest technology acquisitions in history.

– We still believe that this deal will expand competition and create more opportunities for gamers and game developers. From day one, we have been committed to addressing competition issues, including offering proposed concessions to the FTC earlier this week. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” said Brad Smith, President of Microsoft.

In an email sent to employees, Activision CEO Bobby Kotick stated that the FTC’s lawsuit may sound ‘alarming’, but he remains confident that the deal will go through, CNN reported.

– The claim that this deal is anti-competitive does not align with the facts, and we believe we will win this challenge,” he said.

The merger challenge reflects the largest setback for Microsoft to date as it has ‘aggressively courted’ regulators around the world in hopes of convincing them to bless the deal. It also marks the most significant challenge by the FTC to the tech industry since it sued to break up Facebook owner Meta in 2020, highlighting the loud promises of U.S. officials regarding a tough antitrust enforcement agenda.

– This is the boldest move the Biden administration has made so far in overseeing mergers (mergers) involving Big Tech and expanding the scope of merger enforcement,” said William Kovacic, a law professor at George Washington University and former FTC Chairman.

– More than anything else they have done, this embodies their commitment to tough merger enforcement,” he added.

Microsoft’s proposed deal would give it control over key video game franchises, including ‘Call of Duty’, ‘World of Warcraft’, and others. This could give the company enormous influence over the future of the multi-billion dollar industry, the FTC stated.

– We are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets,” said Holly Vedova, Director of the FTC’s Office of Competition.

Officials in the United Kingdom and the European Union have also closely scrutinized the deal as potentially anti-competitive. However, the FTC’s appeal marks the first attempt by the antitrust regulator to completely block the deal.

Microsoft could leverage its ownership of Activision’s products to raise prices or attempt to steer players to gaming platforms it controls, such as Xbox or Windows, the FTC suspects. The deal could also impact the emerging market for cloud gaming services (cloud), in which Microsoft is involved through its subscription service, Xbox Game Pass.