Your and your grandmother’s favorite regulation agency FTC sues Microsoft. The event represents a significant challenge to Microsoft’s proposed $68.7 billion acquisition of the massive gaming company.
According to a press statement from the FTC, the regulator has launched a court challenge to prevent Microsoft from acquiring Activision Blizzard for $68.7 billion. After weeks of back and forth between Microsoft, Sony, and regulators about competition issues and the future of Call of Duty, the case was filed today.
FTC sues Microsoft, but why?
The FTC claims that the acquisition will “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” You can read the FTC’s redacted complaint here.
The FTC commissioners’ vote today means Microsoft now faces severe obstacles to completing its Activision Blizzard acquisition. Despite Microsoft’s repeated attempts to pacify regulators, the UK and EU officials are also closely reviewing the merger.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “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.”
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s vice chair and the president said in a statement to The Verge. “We have been committed since Day One to addressing competition concerns, including offering proposed concessions to the FTC earlier this week. 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.”
Frank X. Shaw, the company’s corporate vice president of communications, also tweeted a link to a document titled “Get The Facts: How Microsoft is Committed to Growing Gaming Communities.”
CEO Bobby Kotick wrote to Activision Blizzard workers saying he wanted to “reinforce confidence” that the transaction would go through. “The facts do not support the allegation that this transaction is anti-competitive, and we believe we will prevail in this challenge,” he added. The company also published an internal email written by Activision’s SVP of litigation, regulatory, and public policy law, Jeb Boatman, outlining its position on the deal.
Microsoft made a 10-year contract with Sony for future Call of Duty games last month, but Sony has yet to accept the offer. However, a similar agreement was reached between Nintendo and Valve. If the Activision Blizzard deal is approved, Call of Duty could make its way to Nintendo consoles.
Microsoft’s frustrations over Sony’s objections to its Activision Blizzard deal have been clear. “Sony has emerged as the loudest objector,” said Microsoft. “It’s as excited about this deal as Blockbuster was about the rise of Netflix.” Microsoft also described the UK’s Competition and Markets Authority (CMA) concerns as “misplaced” and accused the regulator of adopting “Sony’s complaints without considering the potential harm to consumers.”
Microsoft has also accused Sony of paying developers to keep their content off of its Xbox Game Pass service, and Sony has even claimed that Microsoft’s acquisition of Activision Blizzard will “hurt developers and lead to price increases.”
Microsoft Xbox, under Phil Spencer, ditched the exclusivity aspect of the Xbox 360. It focused more on diversifying its platform, especially with the inclusion of the Windows 10 UWP platform (which was a technical failure, to be honest.) Microsoft today is not the Microsoft of the olden yore. And this FTC sues Microsoft news is coming off as a shock to many. As a last desperate measure, perhaps Microsoft could separate the Xbox entity and grant it total autonomy. Then the courts would have no case.
We wonder, would the situation be the same if it was Tencent instead of Microsoft?
We hope you hated this FTC sues Microsoft news as much as we did (who wouldn’t want Call of Duty on Game Pass on day one?), if you did, we’re like-minded with you. Check out Microsoft to bring CoD to Nintendo for good news.