FTC Moves To Block Microsoft’s $69 Billion Purchase Of Activision
ANKARA, TURKIYE - JANUARY 18: In this photo illustration, the logos of Microsoft and Activision Blizzard are displayed in Ankara, Turkiye on January 18, 2022.
Hakan Nural/Anadolu Agency via Getty Images

Regulators at the Federal Trade Commission are attempting to block Microsoft from acquiring video game developer Activision Blizzard for $69 billion, claiming that the merger would enable the technology conglomerate to reduce market competition with subsidiary Xbox.

The agency contended in a press release that Microsoft routinely acquires gaming companies to “suppress competition from rival consoles.” Members of the commission voted three to one on issuing the legal complaint.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” FTC Bureau of Competition Director Holly Vedova remarked. “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.”

Stock prices for Activision, which develops popular games such as Call of Duty and World of Warcraft, have risen more than 11% since the beginning of the year, but fell 1.4% on Thursday. Shares for Microsoft, which have fallen more than 26% this year, increased by 1%.

Microsoft President Brad Smith contested the agency’s sentiments in a statement claiming that the firm already addressed antitrust worries from regulators. “We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers,” he remarked. “While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court.”

Smith argued in an opinion piece for The Wall Street Journal that purchasing Activision will allow Microsoft to more easily compete with Sony and Nintendo, which surpass Xbox in the console gaming space. Revenue generated by the video game platform dropped 3% year-over-year as of the company’s fiscal first quarter, according to an earnings report.

“While modern consumers can stream videos or music on multiple devices on low-cost subscription plans, many games can often only be individually purchased and downloaded onto one device,” he wrote. “Microsoft wants to change that by offering consumers the option to subscribe to a cloud gaming service that lets them stream a variety of games on multiple devices for one reasonable fee. It would also benefit developers by allowing them to reach a much broader audience.”

Policymakers at the FTC, however, believe that Microsoft could increase pricing at Activision, which is one of the few game developers creating high-quality products for multiple platforms.

FTC Chair Lina Khan, a 33-year-old who also serves as a law professor at Columbia University, was overwhelmingly approved by the Senate last year on a hawkish approach toward regulating technology companies. A number of antitrust packages have been introduced to Congress by bipartisan coalitions over the past several years with negligible success.

Khan emerged to prominence with an essay published in the Yale Law Journal, entitled “Amazon’s Antitrust Paradox,” which argued that the nation’s current regime of discouraging predatory pricing is inept to spurn abuses from online platforms.

“The economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded,” she wrote. “Because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.”

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