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FTC Seeks to Block Microsoft Corp.’s $69 billion Acquisition of Activision Blizzard, Inc.

The FTC wants to prevent Microsoft Corp. from buying Activision Blizzard, Inc. According to the agency, if the producer of Xbox gained control over major video game franchises, it would be able to hurt competition in high-performance gaming consoles and subscription services by limiting or degrading access to its well-liked products by rivals.

According to the Federal Trade Commission, Microsoft Corp.’s $69 billion acquisition of Activision Blizzard, Inc. and its popular gaming franchises like Call of Duty—the largest deal ever in the history of video games—would allow Microsoft to stifle competition for its Xbox gaming consoles as well as its quickly expanding subscription content and cloud-gaming businesses.

In a complaint that was released today, the FTC charged Microsoft with purchasing significant game content and using it to hinder competition from competing platforms. This includes ZeniMax, the parent firm of Bethesda Softworks, being purchased by Microsoft (a well-known game developer). Microsoft decided to make certain of Bethesda’s games, such as Starfield and Redfall, Microsoft exclusives in violation of its pledges.

The FTC further reports,  “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.”

“Microsoft’s Xbox Series S and Series X are one of only two types of high-performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint. Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has millions of monthly active users around the world, according to the FTC’s complaint.”

Activision currently has a strategy of offering its games on many devices regardless of producer. But that could change if the deal is allowed to proceed. 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.”

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