The US Federal Trade Commission (FTC) has filed a lawsuit to try to block Microsoft’s plan to buy Activision Blizzard for $68.7 billion, according to the regulator’s press release. The lawsuit comes after weeks of wrangling between Microsoft, Sony and regulators over competition and the future of Call of Duty. The FTC said the acquisition “would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.”
The vote by FTC members means Microsoft faces significant hurdles to closing its deal with Activision Blizzard. Regulators in the UK and the EU are also scrutinizing the deal, despite repeated attempts by Microsoft to reassure them.
“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.”
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” said Brad Smith, vice chairman and president of Microsoft. “We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. 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.”
In a letter to Activision Blizzard employees, CEO Bobby Kotick told staff he was “confident” the acquisition would close. “The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge,” he wrote.
Last month, Microsoft offered Sony a 10-year deal for new Call of Duty games, but Sony has yet to accept the offer. A similar deal was negotiated between Nintendo and Valve. If the deal with Activision Blizzard is approved, Call of Duty may appear on Nintendo consoles.
Microsoft’s frustration with Sony’s opposition to the Activision Blizzard deal was understandable.
“Sony has been the most vocal opponent,” said Microsoft President Brad Smith in a recent article in the Wall Street Journal. “We’re as excited about this deal as Blockbuster is about the rise of Netflix.”
Microsoft also called the UK Competition and Markets Authority’s (CMA) concerns “misplaced” and accused the regulator of accepting “Sony’s complaints without considering the potential harm to consumers”.