FTC sues to stop Microsoft’s Activision Blizzard acquisition

FTC sues to stop Microsoft’s Activision Blizzard acquisition: Thursday, the FTC announced it has filed an antitrust complaint against Microsoft, alleging that the software giant’s proposed acquisition of video game publisher Activision Blizzard would be illegal under U.S. antitrust law.

Microsoft is no stranger to the challenges posed by its rivals. The year 1998 saw the United States The US Department of Justice initiated extensive antitrust litigation against the firm. As a result, Microsoft made some adjustments to how it does business in the Windows OS sector. The Activision Blizzard merger is being investigated by British regulators who are concerned that it could reduce competition in the country.

For $68.7 billion and to be completed by June 2023, Microsoft revealed in January its intention to acquire Activision Blizzard. Several of Microsoft’s gaming rivals, including Sony, have put pressure on the company to abandon the partnership. Microsoft has frequently stated that, even if the purchase goes through, it will not be the world leader in gaming, and it has pledged to make its popular “Call of Duty” games available on platforms other than those owned by Microsoft.

Microsoft’s vice chair and president, Brad Smith, said in a statement, “We continue to think that this deal will expand competition and generate more options for gamers and game creators.” Since day one, we have been dedicated to addressing competition concerns, and just this week we proposed concessions to the FTC as part of that effort. While we want to work toward a peaceful resolution, we are ready and willing to state our case in court.

The administrative complaint filed by the FTC will be heard by the FTC’s internal administrative law judge and was approved by a vote of 3-1 by the FTC’s commissioners. After a hearing that is similar to a trial, the ALJ will issue a preliminary ruling. The decision can be appealed to the entire commission for a vote by either the respondent or FTC employees acting as “complaint counsel.” After that, the responder still has the option of appealing the commission’s decision to a federal appeals court.

The FTC alleged that if Microsoft owned Activision’s intellectual property, it would have “the capacity and enhanced motivation to withhold or degrade Activision’s material in ways that substantially diminish competition,” including competition on product quality, pricing, and innovation. Customers in some markets would suffer greatly if competition disappeared at this critical juncture.

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The FTC has issued a statement alleging that Microsoft, in conjunction with its ZeniMax agreement in 2021, has engaged in a pattern of anticompetitive behavior by purchasing games and then leveraging those purchases to limit the market share of other console manufacturers. Microsoft assured antitrust officials at the European Commission that it would have no incentive to prevent consumers from playing ZeniMax games on consoles other than the Xbox, but the FTC claims that Microsoft then made ZeniMax games like Elder Scrolls VI, Redfall, and Starfield Xbox exclusives after the European Commission approved the deal.

According to the FTC, if Microsoft goes through with the acquisition, Activision Blizzard may stop porting its games to devices from different manufacturers. According to the agency, Microsoft has the potential to raise pricing or degrade the experience on competitor devices like Sony PlayStation consoles, or prevent Activision Blizzard consoles from reaching consoles other than Microsoft Xbox systems.

However, over time, Microsoft has released games like Minecraft to other devices, and the company does offer titles that are exclusive to the Xbox. This was pointed out in October by Phil Spencer, CEO of gaming at Microsoft, who noted that Sony also has its own collection of exclusive brands. He insisted that the number of individuals using the company’s games should increase rather than decrease.

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Microsoft is aiming to recruit users to its Game Pass service that allows access to hundreds of games. As an added bonus, subscribers to Game Pass Ultimate can play games streamed from Microsoft’s data centers on mobile devices like smartphones.

In its argument, the FTC argued that the planned merger is likely to lead to less competition or even monopolies in the markets for gaming subscription services, cloud gaming, and high-performance consoles.

We hope that more people all across the world will play Call of Duty and have fun with it. After the merger between Microsoft and Activision Blizzard, Lulu Cheng Meservey, Activision’s executive vice president of corporate affairs and communications, tweeted that the company would need Call of Duty to be available on several platforms.

FTC Chair Lina Khan, who has long signaled tough action on tech, has reached a critical milestone with this complaint. While her term has featured a lawsuit aiming to block Facebook owner Meta
The lawsuit filed to prevent Microsoft’s proposed acquisition of virtual reality fitness app creator Activision is significant for its size because it targets the largest technological transaction ever.

Khan and her counterpart at the Justice Department’s antitrust division, Jonathan Kanter, have stated that they want the agencies to become more comfortable taking big swings and that a high victory record in court is likely an indication that they aren’t fighting enough cases.

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With the Department of Justice’s recent victory over Penguin Random House’s proposed acquisition of Simon & Schuster, federal enforcers have seen a streak of defeats in merger cases over the past several months.

The FTC’s challenge to Illumina’s planned acquisition of Grail in the biotech field was dismissed by an administrative law judge, but the FTC has stated that it will appeal the decision. UnitedHealth Group-Change Healthcare, US Sugar-Imperial Sugar, and Booz Allen Hamilton-EverWatch are the three merger cases the Antitrust Division has lost and announced they will appeal or contemplate appealing.

In an opinion article for the Wall Street Journal published earlier this week, Smith foreshadowed Microsoft’s arguments against blocking the deal, calling it a “big mistake.”

FTC sues to stop Microsoft's Activision Blizzard acquisition
FTC sues to stop Microsoft’s Activision Blizzard acquisition

Smith noted that “Microsoft confronts significant hurdles in the gaming sector,” noting that the company’s Xbox console game system is now ranked third, behind Sony’s PlayStation and the Nintendo Wii.
Switch. Additionally, Microsoft “has no substantial footprint in the mobile game sector,” as he put it. Specifically, he drew consideration to Apple.
plus Google
, noting that despite the fact that the mobile game industry is a lucrative and rapidly expanding market, Apple and Google take a “substantial amount” of that money from developers in the form of royalties.

Activision Blizzard does have a position on mobile devices courtesy of its 2016 acquisition of King, which offers the Candy Crush Saga game. The Candy Crush franchise has surpassed 200 million monthly active users, Activision Blizzard revealed in November.

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Smith said that Microsoft’s acquisition of Activision would help the company compete in the video game market, which would be good for consumers since it would encourage more innovation. He downplayed worries made by competitors like Sony, saying the business is “as pleased about this transaction as Blockbuster was about the rise of Netflix.”

Activision Blizzard shares touched a session low of $73 per share after the FTC announced its action. Microsoft has agreed to pay $95 per share.

Activision Blizzard CEO Bobby Kotick said in a memo to staff that the claim that the merger is anti-competitive does not square with the facts.

He concluded that “simply put,” a merger between Microsoft and ABK would benefit “players,” “workers,” “competition,” and the sector as a whole. “This provides our athletes the freedom of choice they’ve been asking for,” the director said.

The FTC is reportedly planning to try to prevent the deal, as reported by Politico last month.

Many inquire

Exactly why did the FTC decide to file suit against Microsoft?

The Federal Trade Commission has filed suit to prevent Microsoft from purchasing Activision Blizzard for $69 billion. The video gaming industry felt the shockwaves of this revelation.

What’s going on with Microsoft and Activision?

Microsoft’s acquisition of Activision is pending regulatory approval, but the company is eager to get its hands on properties like Call of Duty and World of Warcraft for the Xbox platform. Potential antitrust issues are being investigated by market authorities in the United States, the United Kingdom, and now Europe.

To clear up some mystery, let’s talk about the Microsoft case.

Although the Class Action cases have begun in the provinces of British Columbia, Ontario, and Québec, they will involve citizens of all of Canada. Certain Microsoft products were accused in the Class Actions of having been unjustly priced increased by Microsoft and Microsoft Canada.

I was wondering about the Federal Court’s ruling on the Microsoft case.

Following an agreement between the government and Microsoft, the Supreme Court overturned the Second Circuit’s ruling, finding that the case was moot due to the passing of the CLOUD Act and a fresh warrant for the data submitted under it.

Concerned about the future of my Activision shares after Microsoft’s acquisition, what will happen if Microsoft wins the bidding

Microsoft will be able to buy out Activision stockholders at $95 a share once the deal has been approved by the relevant regulatory bodies. There would be a rapid increase of 25%, as was previously mentioned. That’s not a bad return for such a brief investment horizon.

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