FTC Sues to Block Microsoft's Activision Blizzard Acquisition - News
by William D'Angelo , posted on 08 December 2022 / 3,582 Views
The US Federal Trade Commission (FTC) announced it has sued to block Microsoft's acquisition of Activision Blizzard claiming the deal would give Microsoft the ability to suppress its competitors in gaming. The deal is not only the largest in Microsoft history, but also the largest in the video game industry as a whole.
The FTC pointed to Microsoft's record of acquiring and using gaming content to suppress content from rival consoles, including its acquisition of the parent company of Bethesda Softworks, ZeniMax Media.
"Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles," reads the post from the FTC.
"Microsoft has already shown that it can and will withhold content from its gaming rivals," said the Director of the FTC’s Bureau of Competition, Holly Vedova. "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."
The FTC mentions the Xbox Series X|S is one of only two types of high performance gaming consoles and Microsoft is a leader in the video game content subscription service with Xbox Game Pass and the cloud-based video game streaming service with Xbox Cloud Gaming.
Activision Blizzard is one of a small number of top video game developers and publishers and they have 154 million monthly active users worldwide, according to the FTC. The games are available on multiple devices, but the FTC says that could change if the deal is allowed to be approved.
The FTC claims "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."
The FTC Commission vote to issue the complaint was 3-1.
Axios reporters Ashley Gold and Stephen Totilo say the FTC filed the complaint not in federal court, but in its own court.
"The agency is not seeking a preliminary injunction to stop the deal from closing, so the two parties are still likely to close," reads the report from Axios.
Microsoft vice chair and president Brad Smith in a statement to The Verge said, "We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers. We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court."
Microsoft corporate vice president of communications, Frank X. Shaw, linked via Twitter to a document titled "Get The Facts: How Microsoft is Committed to Growing Gaming Communities."
In the document, Microsoft posts its statement to the European Commission on its ZeniMax acquisition: "Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment. Factors that will inform Microsoft’s decision making on future games include consumer demand and preference and the willingness of third parties to work with Microsoft to launch games for their devices."
sharing this for overall context. :)https://t.co/ZRY2wxQasr
— Frank X. Shaw (@fxshaw) December 8, 2022
Activision Blizzard CEO, Bobby Kotick, in a message sent to to Activision Blizzard employees stated, "I wanted to provide a brief update on our pending merger with Microsoft. This week the U.S. Federal Trade Commission (FTC) announced its decision to challenge the deal. This means they will file a lawsuit to block the merger, and arguments will be heard by a judge.
"This sounds alarming, so I want to reinforce my confidence that this deal will close. The allegation that this deal is anti-competitive doesn't align with the facts, and we believe we’ll win this challenge.
"Thanks to the hard work by all of you every day, we’re on a strong path, bringing epic joy to players around the world with what I believe are the greatest games in the industry. At the same time, the competitive landscape is shifting, and, simply put, a combined Microsoft-ABK will be good for players, good for employees, good for competition and good for the industry. Our players want choice, and this gives them exactly that."
He added, "We believe these arguments will win despite a regulatory environment focused on ideology and misconceptions about the tech industry."
This week Microsoft Gaming CEO Phil Spencer announced Microsoft has entered a 10-year commitment with Nintendo to bring Call of Duty to Nintendo platforms if Microsoft's Activision Blizzard acquisition is approved. He added Microsoft is committed to keep releasing Call of Duty on Steam alongside Xbox after the deal closes.
"Microsoft has entered into a 10-year commitment to bring Call of Duty to Nintendo following the merger of Microsoft and Activision Blizzard King," said Spencer. "Microsoft is committed to helping bring more games to more people – however they choose to play."
Valve President Gabe Newell said he did not sign Microsoft's long-term Call of Duty commitment as he trusts their intentions.
"We’re happy that Microsoft wants to continue using Steam to reach customers with Call of Duty when their Activision acquisition closes," said Newell at the time. "Microsoft has been on Steam for a long time and we take it as a signal that they are happy with gamers reception to that and the work we are doing. Our job is to keep building valuable features for not only Microsoft but all Steam customers and partners."
"Microsoft offered and even sent us a draft agreement for a long-term Call of Duty commitment but it wasn’t necessary for us because a) we’re not believers in requiring any partner to have an agreement that locks them to shipping games on Steam into the distant future b) Phil and the games team at Microsoft have always followed through on what they told us they would do so we trust their intentions and c) we think Microsoft has all the motivation they need to be on the platforms and devices where Call of Duty customers want to be."
The Communications Workers of America (CWA), one of America's largest unions, this week called for the Federal Trade Commission (FTC) of the USA to approve Microsoft's Activision Blizzard acquisition.
"The coming decision about whether to allow Microsoft’s merger with Activision Blizzard to move forward is a bellwether for American antitrust policy," said CWA president Chris Shelton at the time.
"By approving this merger, the Federal Trade Commission (FTC) has the opportunity to make a strong statement in favor of economic democracy and provide a blueprint for an enforceable remedy to protect workers from large employers abusing market power to undercut wages and working conditions."
Microsoft's acquisition of Activision Blizzard has so far been approved in Brazil, Saudi Arabia, and Serbia unconditionally.
Update 1: Added Microsoft's response and Activision Blizzard CEO Bobby Kotick message to employees.
Update 2: Added report from Axios.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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Article updated with Microsoft's response.
Edit: Article updated again with Bobby Kotick's message to Activision Blizzard employees.
Edit 2: Updated to add Axios report.
Thanks.
What? Can you elaborate more please?
This is a quote from Axios reporters covering the story, "The agency is not seeking a preliminary injunction to stop the deal from closing, so the two parties are still likely to close.”
My guess. Demand certain concessions from Microsoft? Maybe selling off the CoD IP?
i see your point. Thanks for the details.
As expected. This isn’t going to look good on the FTC when MS presents their case. Which they already did as soon as news broke that the FTC was going to sue lol
It doesn’t look good for the FTC lol
Edit: Oh my god.....the only time I'll ever agree with Bobby Kotick, "the allegation that this deal is anti-competitive doesn't align with the facts, and we believe we’ll win this challenge."
crying in America today will get you what you want!
Lol, legal experts already say this suit will fail. They have no case, a big part of their argument seems to be built on a misinterpretation of an agreement Xbox made with the European Commission to keep existing Zenimax games on PS. They claim that by making Redfall and Starfield exclusive to Xbox and PC, Xbox violated their agreement with the EC. Thing is, the terms of that agreement only referred to ports/remasters/remakes of existing games, such as Elder Scrolls Online, Skyrim Anniversary, and Fallout 76 which Xbox released on PS5 as promised, as well as to the 2 Zenimax games that Sony timed hatted, Deathloop and Ghostwire Tokyo, which Xbox also released as 1 year timed exclusives to PS5 as promised. Xbox honored that agreement to the letter. FTC is suing based on a misinterpretation of facts.
Legal experts say a lot of things, a few months ago they were saying the student loans cancelation was 100% happening, now it sounds like the Supreme court is going to block it. How often does the ftc lose such a lawsuit?
I'm no legal expert, but I always assumed the Supreme Court would block that. You can't use taxpayer money, some of which was collected from blue collar workers who never got to attend college, to pay off the loan debt of people who chose to go to college when they knew they couldn't afford it. That sounds unconstitutional to me at least. I figured the Democrats only did that to win some goodwill ahead of the midterms, I don't think they ever actually expected the student relief program to get past the courts.
The FTC has been losing alot the last several years as far as I know. They did have 1 big win, blocking the merger of book publishers Penguin-Random House and Simon & Schuster, but the combined marketshare of those book publishers was like 40%, the combined marketshare of Xbox + Zenimax + ABK is only like 15% I think, much smaller. We have seen deals that would allow marketshares of 20% or more pass in the past, such as Disney's acquisition of Fox, which gave them over 20% marketshare.
Not to mention FTC as no standing on whether or not MS broke rule it as made with the EC. If that's the basis of FTC argument I believe MS have a great case to ask a motion to dismiss, winning by default and preventing the case to even be ruled upon, citing that if it broke a supposed agreement with the EC the EC is more than qualified to file a suit on their own in the appropriate court of law.
Man you gotta inside track to all the great legal advisers???🤣
Some of them were posting about it like a week ago when it was first rumored that the FTC was going to sue.
Would please take a count on all the legal advisors opinions on this???
All that tax payer money used only to lose!
Well, the concessions MS has given so far are real, and they lessen the impact of the buyout. Whether Xbox fan like to admit it or not, COD day 1 being on PS for the next 10 years was never on the table until few weeks, and that in itself, is a win to SONY and the competition. Who knows, maybe the next Bethesda games will make it on PS day one and xbox will be the same old Halo/Forza box for another decade :)
This suit is a waste of time and money. -_-
Drama, drama, drama. Where the Netflix cameras at?
LOL, FTC believes the salt of fanboys on Twitter. No way they can win this,
Regarding whether Microsoft lied/misled the EC, this may be what the FTC is referring to
https://media.discordapp.net/attachments/892412374546542603/1050497327779033128/image.png
The last statement in particular, is a much stronger statement compared to what Microsoft is talking about now. Microsoft was not just saying it would decide on a case by case basis, it also said it is unlikely that the economics would favor making Zenimax game exclusive. Of course Microsoft can now say well it changed its assessment, but this kind of backpedaling is exactly what the FTC and regulatory body wants to prevent and get more firm commitments for
Good catch. However, the economics more strongly relate to Elder Scrolls and Fallout, as they have seen releases on PS in the past. So I still think Microsoft can explain that one. They may have to make an early announcement on Elder Scrolls VI coming to PS to help get around this, whether they originally intended to do that or not.
FTC just spit out a minimum of 3 obvious lies.
-
European regulators were assured that Zenimax/Bethesda games wouldn't be exclusive. OBVIOUS LIE. Europeans regulators themselves have never said anything about this fake assurance.
-
Game pass is a "leading" service. Another easy lie. Sony is far ahead in the lead for game subscriptions. ( These lies a painfully false )
- "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."...What a joke. literally all competition is not against this dead except Sony.
Does this make FTC liers? If so the others like EC just saw FTC lie?
The FTC was never the one to worry about.
I agree with most people that MS will most likely beat it but they might be forced to make even bigger concessions than they already have. On top of that this puts into question any further acquisitions. If the FTC is stepping in now for this deal I assume they wont just keep letting MS buy up studios.
Why does MS even need this? They’re a two trillion dollar company with 23 studios. Why don’t you try something novel and actually grow and nurture your existing studios so they can actually start making better games. Now that’ would be competing!!!👍
Go look back on ps1 days and ask Sony the same thing. Didn’t they buy naughty dog and not creat them? Spider-Man devs too? How about gorilla game maker of kill zone ? Is that competing? Is so why is it bad now lol
MS isn’t buying one of Activision’s studios. You know the difference but refuse to use reason and common sense. You might actually be incapable of that.
Lol because Sony can’t afford to do it lol.I know the difference . You don’t know jack when it comes to Sonys history don’t make your own research on current gaming news and yet when I schooled you , you make it seem like it’s unfair Microsoft is so much richer than sony. I say deal with it that’s life one is richer than the other.I would like to say you know the difference but since you’re not capable of doing your own research I’ Say you need everything spoon fed to you:) now open your mouth here comes the train lol
You should try to school yourself first, toddler.
Says the toddler jumping in on a topic he has no idea about …… I give you 30 mins to read and catch up or for you to say random things you don’t understand;) please tell me how I should school myself I’m waiting for a response with merit and and actual research which I’m happy to provide links to back up my argument:)
Is that how you articulate your inferiority complex? That’s actually hilarious.
No proper response that’s funny and predictable :)
This subject has been debated countless times here. You’re not bringing anything new, and certainly nothing worth debating this again. You bring up the same tired fallacious arguments, misguided and biased as you are. Go back through the site’s many articles about this topic, see for yourself, and then keep that cheerleader shtick to yourself.
Hahaha in other words you’re not capable of making a legit case so in game terms you rage quit :) it’s ok boy . Let me know when you want me to spoon some more info lol I’m biased hahah yes tell me how I’m biased Let’s see if you can explain that I’m waiting;) …… 1.2.3
I see you have trouble reading and have no self-awareness.
Expected.
I see you have trouble with that and more . You have trouble proving your point :) come on I’m still waiting prove me wrong or do you have memory problems as well . I can remind you don’t worry I know the boy needs to be spoon fed and if you’re good I’ll even read you a story:)
Ok unfairness of Microsoft buying Activision , oh make Microsoft grow and creat their own games and studios, lastly you ignore the part or skip around fact that Sony bought half their teams as well. Sucker punch games, gorilla games ,blue point, naughty dog, insomniac, bungie, ff7 ff16( financing the game is the same as money hatting) Haven Studios(2021 or 2022)and I bet you still can’t defend your whole take on Microsoft needs to creat and grow their own studios…. Doesn’t look like Sony did any of that for at least half their teams fact. There are more studios that Sony got this year yet ms(yes smaller buys but Sonys pockets are smaller) focus on the one big 1 this year. Unfair then tell the company to make more money:) I’m waiting in vain for a response that comes from an adult but I known children with better sense than you :) if you could read you would see how much you’re getting downvoted against me lol
😂😂😂👌
You’re a classic case.
You mean me pointing out how wrong your logic is and you refuse to even defend yourself in any meaningful manner yeah classic xD again I’m waiting or can the kid put together a proper argument ;) 1.2.3 again kid can’t/ won’t do it. If you’re still on with this topic come on up in Skype with other gamers and see if your argument stands. Unless you’re afraid to look like a fool
I didn’t say anything, and then you started arguing with yourself. That’s how pitiful your ego is. 😅👌😂
Ah you jumped into a conversation you were not a part of lol You said some drunken shit that made no sense but to you and I was nice enough to school you . You are welcome. Now open your mouth here comes the train lol
You are hilarious. I pity your social circle and family. May God help them.
You afraid:)?I pity your family it’s hard to look after a little kid who can’t properly read or comprehend a full paragraph.do you even have a social circle?……. Outside a self help facility? Again I’m waiting;)
😂😂😂😂😂
If ms has share games that they own, so does Sony then right. They blocked slot of third party games from xbox which seems to be okay if they do it.
I was referring to games like ff7 remake, forspoken, other square enix games and other Japanese publisher games and so on. Kena Bridge if spirits was meant to be timed right?. What about kotor remake, the rumored mgs remake. The list goes on. Sony is just as bad as ms. U technically don't need to own an xbox to play those games 🤣
Is ff7 remake, god of war , last of us , Spider-Man and so on are on Xbox ? No at least Xbox games comes out day one on pc unlike sony that will wait over a year till they release their games on pc. Score 1
I'm going to be hilariously downvoted for saying something true but this is essentially Microsoft's own fault. If they had continued with the original path for Starfield and made it a multi-platform release then I think there would have been far less cause to doubt their intentions. They've made their own "case by case" mantra look untrustworthy. They snatched away a game that had been ANNOUNCED AND PLANNED for PlayStation, that PlayStation fans were clearly anticipating, then claim that "player demand and sentiment" would be taken into account? No.
Source to back up the claim that Starfield was announced and planned for PlayStation?
"Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment." Oh, you fucking liars.
Would love to see this drag out for years and make it much much harder to purchase huge multi-platform publishers.
The FTC recently scored a major win by successfully blocking the merger of 2 book publishing companies. Let's see if they can keep up the momentum.
The thing is, that was an actual monopoly they blocked. The combined book sales marketshare of Penguin-Random House and Simon & Schuster is 40% or more I think. Xbox + Zenimax + ABK is only like 15% of all game software sales, and would probably still be 3rd place in the console hardware market as well (just a much closer 3rd place than they are now).
Good
The famous Phil Bethesda lie comes back to bite them in the ass!!! In MS you should “never” trust!!!!
What lie are you talking about? Phil never once promised all Zenimax games would release on PS, he said each would be decided on a case by case basis.
So only PlayStation is allowed to have exclusives ? Also he never promised anything
Great news!!! Nobody should be buying huge multiplatform publishers!!!
Finally some court will take part in this. Facts will be the most important not Sony fans complaints.
I think it's gonna be a waste of time, though.
Okay, now that the adults have spoken can we stop parroting the idea that this is a good thing just becuase Microsoft's PR department says it is? (downvote storm in 3-2-1-...)
So it’s a bad thing because you say it is ?
IT's a bad thing becuase the people who are specifically commissioned to determine if it's good or not on a national scale are saying that it's bad.
Sounds good to me if Nintendo fans can get in on this . You got to admit it ms putting cod back on Nintendo is a good thing. I don’t care personally since I don’t own a switch but this deal is probably for switch 2
Nintendo fans get in on this?
There is currently fucking nothing preventing Activision to put whatever CoD games they want on the Switch, yet, they’re not doing it.
That’s because they don’t think there’s a market for it .last one came out on Wii’u and you know how well that went oh wait you most likely don’t so I’ll tell you , it struck out. But now like switch has over a 100million users it’s a big market for Microsoft . Hardware limitations is a factor but I think cod is for switch 2 . Here’s a link you’re welcome;)
https://www.nintendolife.com/news/2022/12/xbox-boss-phil-spencer-explains-microsofts-plans-for-call-of-duty-on-nintendo-platforms
Alright CMA, your turn. Hopefully they sue to block as well. Whether it goes through or not it doesn't matter in the end. Just tie up MS for as long as possible is all. That way they know purchasing full on publishers from now on will be a hassle for them.
i agree Bethesda and now Activision is a bridge to far. Compete by actually making great games not buying up huge publishers!!!👍
To make games u need developers and publishers. Similar to what Sony has done with naughty dog who published their own games. Same with santa Monica studios with god of war. Same with guerilla studio with horizon and kill zone.. Same with insomniac with their ratchet and clank. Sony bought them all . U got to start somewhere. Ms has a better history of sharing then Sony does. Does this means u support permanent money hatting?
I applaud you u said it better than me
Well, this seems like something that will take quite some time to solve, especialy If EU/UK follow FTC, something very likely...
I don't think this deal is coming to life in 2023, maybe not even 2024.
Not gonna lie...
I hope for FTC victory, they need to stop this deal, and It's not Just about video games, It's about megacorps abuse of their "infinite money"....hopefully Xbox Will stop bullshit pratice of buying giant publishers and start to focus on creating/nurturing stuff like Nintendo and Playstation. Also "Mr.Bob" is totaly fucked If this deal fails...
Look back on the ps1 days . How many games and companies did Sony buyout or had exclusive deals with . I can’t comment on Nintendo since I take no interest in them but sony is doing the same thing . Either sony fans forget ps1 history and some ps4 money hatting , 2 they are just mad Microsoft can do it better then sony can dream of doing it. Or both
I don't really remember those days. What companies did Sony buy and were any of them as big as activision? It's not just buying a studio that's the issue here it's the size.
No and that’s were people are getting mad because someone can buy big companies like this Sony can’t
Care to elaborate about "ps1 history", all the Ips that "used to be multiplatform" and talk about Sony "big purchases" in PS1 era +25 years ago??
There’s no big purchases Sony can’t afford it ms can lol. And sure let’s see naughty dog was independent , insomniac as well , bungie, blue point studio, cod deals since ps4 days , ff7 and ff16 is not coming to any other console, hell it will come out on pc….. a year later.I’m going to have to look at the tomb raider deal as well with silent hill 1 , Zipper Interactive founded in the 90s bought by Sony in the .2000s , Psygnosis Limited, bend studios , sucker punch games :) I can go on …… gorrilla games
People don't realise that. I have to start from somewhere. Ms is still far in third place compared to sony even after buying abk
Yes exactly this purchase won’t make them number 1
