Another regulator has come out against Microsoft’s acquisition of Activision Blizzard.
Recently the British Competition and Markets Authority (CMA) expressed concern that the deal could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming).
Now the US Federal Trade Comission (FTC) has expressed its opposition to the deal, saying it would lead to Microsoft’s Xbox division to gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content.
In their release, they state:
The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.
The FTC notes that Microsoft has a record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). In the past 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.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “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 notes with control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.
In an earlier blog post, Microsoft said they did not purchase Activision for its gaming catalogue but rather its expertise in mobile gaming, saying: Bringing more games to mobile platforms, however, requires new capabilities. The expertise that the teams at Activision Blizzard bring in developing games for mobile platforms will help us understand how to create games that engage players around the world.
Secondly Microsoft also denied planning to leverage Blizzard for Game Pass by making their games exclusive, saying: We’ve heard that this deal might take franchises like Call of Duty away from the places where people currently play them. That’s why, as we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere. We will continue to enable people to play with each other across platforms and across devices. We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft in 2014. As we extend our gaming storefront across new devices and platforms, we will make sure that we do so in a manner that protects the ability of developers to choose how to distribute their games.
Microsoft earlier says they will continue to engage with regulators with a spirit of transparency and openness as they review this acquisition.