In a surprise, the Federal Trade Commission (FTC) will be seeking to block the Microsoft Activision deal. The regulating agency voted 3-1 to issue the administrative complaint, despite prior reports that at least two of the four-person panel had shown support of the merger.
FTC cites Microsoft’s past with Bethesda in blocking merger
The FTC believes that Microsoft’s acquisition of Activision, according to a press release, will “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” Furthermore, it cites Microsoft’s past acquisition of ZeniMax, the parent company of Bethesda, as an example of its anti-competitive practices:
Microsoft decided to make several of Bethesda’s titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.
Holly Vedova, Director of the FTC’s Bureau of Competition, adds: “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.”
The FTC believes that the acquisition could lead Microsoft to manipulate and negatively impact the pricing, timing, quality, and player experience of Activision’s games.
In late November, Activision’s Lulu Cheng Meservey stated that the company would deliver a legal “fight” if regulators block the acquisition, in response to a report from Politico saying that an anti-trust lawsuit would “likely” be filed by the FTC. Microsoft has already geared up with corporate lawyers to face this legal challenge from the commission, with some Bloomberg analysts believing that it will likely win the battle in U.S. courts.