U.S. will likely challenge Microsoft’s Activision Blizzard acquisition: report

Microsoft’s pending acquisition of Activision Blizzard could face a major roadblock from the U.S.’ Federal Trade Commission (FTC).

Politico, citing “three people with knowledge of the matter,” reports that the FTC will likely file an antitrust lawsuit against Microsoft in an effort to block the tech giant’s takeover of the Call of Duty maker. While the publication notes that the FTC hasn’t yet made a formal decision, the agency is nonetheless skeptical of Microsoft’s case for purchasing Activision Blizzard.

As the deal has faced regulatory approval across the globe, a key point of contention has been Call of Duty. Rival Sony has argued that Microsoft owning the massively popular first-person shooter franchise would provide an unfair advantage.

“Call of Duty is not replicable. Call of Duty is too entrenched for any rival, no matter how well equipped, to catch up. It has been the top-selling game for almost every year in the last decade and, in the first-person shooter (‘FPS’) genre, it is overwhelmingly the top-selling game,” wrote Sony in a filing to the U.K.’s Competition and Markets Authority (CMA). As an example, Sony mentioned that EA’s Battlefield, which is a direct Call of Duty competitor, “cannot keep up” with Activision’s series.

Microsoft, in turn, has said it’s willing to keep Call of Duty on PlayStation for many years while arguing that it would still be third in the gaming market after Sony and Tencent even upon acquiring Activision Blizzard.

“The suggestion that the incumbent market leader, Sony, with clear and enduring market power, could be foreclosed by the smallest of the three console competitors, Xbox, as a result of losing access to one title, is not credible. Sony’s PlayStation has been the largest console platform for over 20 years, with an installed base of consoles and market share more than double the size of Xbox,” said Microsoft in a November 23rd statement to the CMA.

However, Politico reports that FTC investigators are also concerned about Microsoft’s plans beyond Call of Duty. The outlet notes that there’s uncertainty surrounding how Microsoft could use future unannounced Activision Blizzard titles to boost its business. So far, Microsoft has only said it intends to make these titles available on its Xbox Game Pass service. Microsoft has also outlined plans to leverage Activision Blizzard to create an app marketplace independent of Apple’s App Store and Google’s Play Store, which it claims will offer consumers more choice. Naturally, such a move would also face significant regulatory scrutiny.

Interestingly, Politico adds that Google is also opposing Microsoft’s Activision Blizzard bid. While the search engine giant’s gaming efforts will be limited to Android games following the January 2023 closure of its Stadia streaming service, Google’s issues with Microsoft reportedly concern other matters. Specifically, Politico reports that Google is alleging that Microsoft purposefully degrades the quality of its Game Pass service on Google Chrome in an effort to steer consumers towards Microsoft products and services. Google claims that Microsoft owning Activision Blizzard would only bolster Microsoft’s efforts in this regard.

Ultimately, it remains to be seen what action the FTC will take. Politico reports that investigators may move ahead with an antitrust case as early as December, although it could opt to do so later down the line, given that Microsoft is currently subject to in-depth probes in both Europe and the U.K. As it stands, Microsoft and Activision Blizzard aim to close the deal by June 2023.

Source: Politico