The Federal Trade Commission (FTC) has filed a lawsuit against the planned merger of tech giant Microsoft and Activision Blizzard, one of the largest videogaming corporations. The federal agency argued the acquisition should be stopped because Microsoft has a record of anti-competitive behavior in the gaming industry, withholding games from other platforms to the benefit of its gaming console, Xbox, and its subscription gaming service.
Microsoft announced in January its intention to acquire Activision Blizzard for $68.7 billion and both companies have since approved the deal. The largest merger in Microsoft’s history, it would make it the third largest videogame publisher behind Sony and Tencent, but only if greenlighted by U.S. regulators.
The FTC stepped in on Dec. 8, saying that if the merger goes through, “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.”
Microsoft has acquired more than 10 game developers in recent years, expanding the portfolio offered to the paying subscribers of its Xbox Game Pass.
“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, in the release.
“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’s expansion in gaming has been perceived partly as an attempt to gain a competitive edge in the race to capture the envisioned “metaverse” market. Some tech executives argue that with the improvements in virtual reality (VR) technology, people will move much of their work and leisure into the virtual world—a metaverse.
Facebook has been investing tens of billions into its metaverse project, changing the company name to Meta last year. So far, however, the results have been mixed, with Meta’s Oculus VR goggles sweeping market share, but its Horizon Worlds online VR platform failing to attract expected user volumes.
Microsoft VR goggles have been less successful, but owning some of the top gaming development studios could give it a leg-up in designing virtual worlds for its own metaverse.
The FTC voted 3–1 to issue the complaint with Commissioner Christine Wilson voting no. As the next step, the case will be heard by an administrative judge.
