The Federal Trade Commission (FTC), which was previously reported to be considering legal action against Microsoft to stop the $69 billion Activision merger, has now officially said that it will pursue the proposal. The announcement was made during a meeting between the FTC and Microsoft on Wednesday that included officials from the software company, commissioners from the commission, and FTC Chair Lina Khan. The FTC issued the complaint after a 3-1 vote, according to a news release from the organisation.
The FTC highlights Microsoft’s action for making Starfield and Redfall exclusive (“despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles”), which are being developed by Bethesda Game Studios and Arkane Austin, respectively, and are both under ZeniMax Media, which Microsoft now owns.
According to Holly Vedova, Director of the FTC’s Bureau of Competition, “Microsoft has already demonstrated that it can and will withhold content from its gaming competitors.” Today, we work to prevent Microsoft from seizing control of a top independent game development firm and abusing it to undermine rivalry in a number of vibrant and quickly expanding gaming marketplaces.
The FTC appears to be citing the case as a key argument to reject the Microsoft concession out of concern that it would happen again if the Activision merger goes through. However, Microsoft President Brad Smith underlines the company’s confidence in its ability to defend itself in court against the complaint.
According to Smith’s tweet, “We continue to think that our deal to acquire Activision Blizzard would expand competition and provide more options for gamers and game developers.” “We have been committed to addressing competition issues since Day One, and earlier this week we offered the FTC some concessions. We support the idea of giving peace a chance, but we are quite confident in our position and welcome the chance to argue it in court.
The CEO of Activision, Bobby Kotick, wrote in a letter posted on the company’s website that he shares the same optimism that the transaction will go through and noted that “the allegation that this deal is anti-competitive doesn’t align with the facts,” similar to what Microsoft said in a response to the UK’s Competition and Markets Authority, which cited Sony’s Call of Duty concern. The Redmond business claims that the regulator’s worries are “misplaced” and that it accepted Sony’s allegations without taking into account any potential harm to customers.
The FTC’s case was officially filed the same week that Microsoft revealed it had given Nintendo a 10-year contract for Call of Duty and promised to retain the game on Steam when the deal is completed. Smith implores Sony, which was presented with the same offer on November 11, to accept it. It has a lengthier licencing offer, which was apparently modified when PlayStation Chief Jim Ryan deemed the original three-year arrangement “inadequate,” but it is still silent.
The lawsuit would be filed before the FTC’s own internal administrative court, Politico noted in the earlier article. Microsoft and Activision can still complete the transaction in the absence of a preliminary injunction issued by the agency, but there is still a chance that global authorities won’t approve it.
