US sues to block Microsoft’s purchase of ‘Call of Duty’ maker Activision

The antitrust watchdog FTC said Microsoft had a history of buying valuable gaming content and using it to suppress competition.

The US trade regulator has filed a complaint aimed at blocking tech giant Microsoft’s $69 billion bid to buy “Call of Duty” game maker Activision over concerns the deal would deny rivals access to games. popular.

Microsoft, which owns Xbox, said in January 2022 that it would buy Activision for $68.7 billion in the biggest deal in gaming industry history.

In its complaint Thursday, the Federal Trade Commission, which enforces antitrust law, said Microsoft had a history of buying valuable game content and using it to suppress competition from rival consoles.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Office of Competition. “Today, we seek to prevent Microsoft from gaining control of a leading independent game studio and using it to harm competition in multiple fast-growing and dynamic gaming markets.”

Microsoft Chairman Brad Smith said the company would fight the FTC. “While we believed in giving peace a chance, we have full confidence in our case and welcome the opportunity to present our case in court,” he said.

The decision to sue comes as US President Joe Biden’s administration takes a more aggressive approach to antitrust enforcement. The US Department of Justice recently halted a $2.2 billion merger between Penguin Random House, the world’s largest book publisher, and its smaller US rival, Simon & Schuster.

Shares of Microsoft and Activision fell on news of the FTC’s complaint. Activision shares were down 2.3 percent at $74.19 a share, while Microsoft fell from previous highs but was still trading nearly 1 percent higher for the day at $246.31.

Microsoft had said it wanted to buy Activision to help it compete with gaming leaders Tencent and PlayStation owner Sony, which criticized the deal.

The FTC said it was concerned that popular Activision games, including “World of Warcraft” and “Diablo,” would no longer be offered on a variety of consoles, PC and mobile devices.

While Microsoft has suggested concessions to address competition concerns, the rapid pace of change in the tech and gaming industries could render those conditions worthless over time.

To entice regulators, shortly after the deal was announced, Microsoft unveiled a new set of principles for its app store, including open access to developers who adhere to privacy and security standards.

And in December, in another move toward hard-hitting criticism, Microsoft made a 10-year commitment to bring “Call of Duty” to Nintendo platforms, marking the first time the popular first-person shooter series had been available on Nintendo. . Microsoft made the same offer to Sony.

Chair Lina Khan and the two Democrats on the committee voted to approve the complaint, while Commissioner Christine Wilson voted “no.”

Activision Blizzard CEO Bobby Kotick told employees Thursday that he was confident the deal would go ahead.

“The charge that this agreement is anti-competitive does not align with the facts, and we believe we will win this challenge,” he said, adding that he believed the companies’ arguments would win “despite a regulatory environment focused on ideology and concepts misconceptions about the tech industry.”

Headwinds abroad

The deal also faces regulations headwinds in europe.

In late November, Microsoft was expected to offer remedies to European Union antitrust regulators in the coming weeks to avoid formal objections to the deal, people familiar with the matter said. The deadline for the European Commission to establish a formal list of competition concerns, known as a statement of objection, is in January.