The Federal Trade Commission (FTC) has sued Microsoft to stop its $69 billion purchase of video game giant Activision Blizzard.
On Monday, the agency filed a lawsuit against Microsoft in the US District Court for the Northern District of California, claiming that the tech giant and Activision plan to consummate the deal without any further notice to the commission.
The FTC asked the court to issue an order blocking the deal by the end of Thursday.
“A preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition during the pendency of the FTC’s administrative proceeding to determine whether the Proposed Acquisition violates U.S. antitrust law,” the commission said.
Microsoft’s Acquisition of Activision Blizzard Faces Another Hurdle
The recent complaint by the FTC marks the latest hurdle to the high-profile acquisition, which has previously been challenged by regulatory bodies such as the British Competition and Markets Authority.
The FTC has argued that the deal would harm competition across the video game market and would provide Microsoft with an unfair monopoly in the industry.
BREAKING: The Biden administration has filed to block Microsoft’s acquisition of Activision Blizzard.
The FTC is stepping in to stop Microsoft from buying video game giant Activision Blizzard for $68.7 billion, a deal that could violate anti-trust law if it were to go through.
— More Perfect Union (@MorePerfectUS) June 12, 2023
The lawsuit follows previous moves by the regulatory body to block the deal through an in-house court, which also raised concerns that the acquisition could damage competition in the gaming industry.
In comparison to the FTC’s in-house court, a federal court will be able to issue a restraining order to stop the purchase from being completed.
If the federal court grants the FTC’s demand to stop the deal, it would also prevent Microsoft from completing the transaction in the United States.
In response to the FTC lawsuit, Microsoft president Brad Smith said the company welcomed the “opportunity to present our case in federal court,” according to a report from The New York Times.
Activision Blizzard has also welcomed the news, calling it an opportunity to “accelerate the legal process.”
“We will now have the opportunity to more quickly present the facts about our merger,” Bobby Kotick, the chief executive of Activision, reportedly said in a note to employees.
Microsoft’s Acquisition of Activision Could Significantly Impact the Gaming Industry
Microsoft’s $69 billion acquisition of Activision could have a significant impact on the gaming industry, which is worth an estimated $184 billion.
Microsoft earns billions of dollars each year in video games, but rival companies such as Sony and Nintendo are considered to have a better catalog of games.
The acquisition of Activision would bolster Microsoft’s position in this regard while harming rival companies.
Phil Spencer: Microsoft needs Activision to expand in mobile pic.twitter.com/FfUFy9259j
— Post Up (@PostUp_SOG) June 12, 2023
In a complaint last year, the FTC justified its decision by citing Microsoft’s purchase of ZeniMax Media.
Similar to Activision Blizzard, Zenimax is the owner of multiple popular IPs with the most notable being The Elder Scrolls and Fallout.
After the said acquisition was complete, Microsoft announced that Bethesda’s highly-anticipated future releases like Starfield and Redfall — most likely the name of The Elder Scrolls VI — would be Windows exclusives.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” the commission said at the time.
According to data from August 2022, Sony’s PlayStation 2 sold a whopping 158.7 million units in its lifetime, becoming the best-selling game system overall.
Notably, Microsoft’s best-performer game console ever is Xbox 360, which sold around 86 million units, which is still a far cry compared to the sale of gaming products by Microsoft.
However, there are still worries that Microsoft, if it purchases Activision, could seek to leverage its position to increase its market share by making more popular games exclusive to its Xbox consoles.
It is worth noting that aside from the US, the acquisition has also proved controversial across other jurisdictions.
For instance, the British Competition and Markets Authority has sought to stop the deal.
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