FTC Could Block Microsoft-Activision Deal in Latest Attempt to Rein in Global Tech Power

UTC by Tolu Ajiboye · 3 min read
FTC Could Block Microsoft-Activision Deal in Latest Attempt to Rein in Global Tech Power
Photo: Depositphotos

The FTC believes that Microsoft acquiring Activision will grant the software giant monopoly of some choice games in the video game space.

According to reports, the Federal Trade Commission (FTC) could prevent Microsoft (NASDAQ: MSFT) from acquiring Activision Blizzard (NASDAQ: ATVI). Inside sources state that the Commission may file an antitrust lawsuit against the Washington-based software giant’s planned $69 million takeover of Activision. Should the FTC lawsuit materialize, it would represent the most significant move so far by Chair Lina Khan to check the powers of global tech corporations.

FTC Wants to Prevent Microsoft Gaining Unfair Advantage in Video Game Space with Activision Acquisition

The core rationale behind the likely FTC antitrust lawsuit is to prevent Microsoft from gaining an unfair advantage in video games via the Activision acquisition. However, the US government’s independent agency is still building its case against Microsoft and looks to make it as foolproof as possible. Meanwhile, Activision sees the FTC’s perceived ‘anticompetitive’ grievance against Microsoft as “completely absurd”. Commenting on the development, a spokesperson for the popular Santa Monica-based video game publisher said:

“We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won’t hesitate to fight to defend the transaction if required.”

Activision further argued that the merger with Microsoft would immensely benefit gamers and the US gaming industry. In addition, the video game publisher also pointed out that joining forces with Microsoft will allow for better overseas competition.

Activision shares dipped 2% in extended trading after closing 1% higher.

Recap of the Acquisition Deal

In January, Microsoft announced the Activision deal, which projects to be the biggest gaming industry deal of all time. However, the deal came under intense scrutiny from regulators and competitors within and outside the US. For instance, Sony, makers of the PlayStation console, which directly competes with Microsoft’s Xbox console, already sees red flags. According to Sony, Microsoft owning Activision would give an unfair advantage to the American tech corporation. This advantage entails Microsoft having exclusive rights to Activision’s staple of wildly popular games like “Call of Duty” and “Candy Crush”. However, Microsoft President and Vice Chair Brad Smith has since moved to dismiss the Sony monopoly allegations, saying:

“Sony, as the industry leader, says it is worried about ‘Call of Duty,’ but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation.”

Amid ongoing developments surrounding the Microsoft-Activision deal, the European Union launched a full-scale investigation earlier this month. According to the 27-member state political guild, its competition enforcer would decide a course of action on the deal by March next year. Meanwhile, Britain’s antitrust watchdog announced in September that it would also launch a full-scale probe into the Microsoft-Activision matter.

Microsoft spokesperson David Cuddy spoke on the company’s “preparedness” to “address the concerns” from regulators and Sony. According to Cuddy, Microsoft will still trail Sony and Tencent in the market upon the deal’s conclusion. Most importantly, he also explained that Xbox partnering with Activision would benefit developers and gamers and make the industry more competitive.

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