FTC Lining Up to Block Microsoft Takeover of Activision

Reports are surfacing that the US Federal Trade Commission may be about to take action to stop the proposed takeover of Activision by Microsoft. Word has it that the FTC is on the verge of filing a full-blown anti-trust lawsuit, according to Politico.

Microsoft made a massive $69 billion bid for the games giant, Activision Blizzard, which owns the Call of Duty and Candy Crush franchises among others.

President Biden has made it clear over the past year that there should be increased scrutiny over any big tech deals which threaten to unbalance the competitive landscape. This latest initiative proves that the administration is indeed serious.

The key issue is whether a merger would create an unfair advantage

The lawsuit hasn’t been agreed — however, the sources claim that depositions have already been taken from Activision chief Bobby Kotick and Satya Nadella from Microsoft. The key issue is whether a merger would create an unfair advantage in the gaming market.

Microsoft and Sony have been locked in a fierce platform war for decades, and any move which tips the balance to a significant degree is likely to pick up scrutiny.

Apparently Sony Interactive, owners of the PlayStation brand, are worried that if Microsoft makes any major game titles like Call of Duty exclusive to the Xbox, it will severely impact the balance of power in the market.

The two companies have spent the past few months trading barbs, through statements released to the public. Sony’s shot across the bow was blunt and to the point:

[SIE] believes strongly that the Transaction will harm competition, industry participants, innovation, and consumers.

Sony’s twenty-two-page statement outlines in detail the negative impact any takeover would have on the market. Not just for the Sony franchise directly, but also for consumers and the developer community. Call of Duty is one of the biggest game brands in the world, and making it exclusive to the Microsoft Xbox would massively damage the Sony platform.

Microsoft Claims it’s No Big Deal

In response, Microsoft has issued its own 111-page statement to rebut any anti-competitive dangers of the deal. One of the most interesting points the company claims is that the deal is actually not that ‘important’.

This is a very strange position to take because no one spends $69 billion on something which isn’t a big deal. They then go on to detail just how pitiful Call of Duty is compared to other games and the market as a whole.

In another interesting twist, Google has also joined in with the argument. The company’s supposedly been saying that Microsoft doesn’t play fair with its Game Pass subscription service. This is apparently in order to steer players away from the Google Chrome platform towards Microsoft platforms.

Microsoft has pledged to continue to make Call of Duty available on PlayStation, for at least the next ten years. But then again, they would say that. And making a title available, while also ensuring it maintains version parity across platforms, are two completely different things.

It’s always a joy to watch tech giants protest when placed under anti-trust scrutiny. The first claim is always ‘this move will definitely make the industry more competitive’, even when it’s the most clear-cut example of consolidation in favor of one party or another.

A History of Dirty Tricks

It’s hard to feel sympathy for Microsoft in this case since the company has a long and tawdry history of bullying behavior in many markets, which continues to this day.

The latest lawsuit to that effect concerns the Redmond giant’s attempts to ‘kill off resalable perpetual software licenses’, Effectively Microsoft is trying to stamp out software licenses of its enterprise products in favor of subscription models, thus shutting the door to third-party suppliers.

To add oil to the fire, regulators in the UK and EU have also opened up in-depth investigations of the deal. All three regulatory agencies are clearly deeply concerned that a merger of this size and scope will end up giving Microsoft yet another dominant position in an important tech marketplace.

Nothing is likely to be decided until the middle of next year, and it’ll be fascinating to see how the parties lobby and protest until the matter is decided — one way or another.

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