FTC Seeks Block of Microsoft's Activision Buy

The FTC filed suit Thursday to block Microsoft’s proposed $68.7 billion buy of Activision Blizzard (see 2204280041), claiming the deal would allow Microsoft to “suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” The FTC voted 3-1 along party lines to pursue the lawsuit, with GOP Commissioner Christine Wilson the lone opponent. A copy of the FTC’s complaint wasn’t immediately available. “Microsoft has already shown that it can and will withhold content from its gaming rivals,” said FTC Competition Bureau Director Holly Vedova. “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.” 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,” but “that could change if the deal is allowed to proceed,” the FTC said: “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.” Microsoft CEO Brad Smith vowed in a statement to fight the lawsuit, noting the company offered “proposed concessions” to the FTC earlier this week. Microsoft “has been committed since Day One to addressing competition concerns,” he said: “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.” The FTC’s action “sounds alarming, so I want to reinforce my confidence that this deal will close,” said Activision Blizzard CEO Bobby Kotick in a letter to employees Thursday. “The allegation that this deal is anticompetitive doesn't align with the facts, and we believe we’ll win this challenge.”