FTC may sue to block Microsoft's $69 billion acquisition of Activision Blizzard

The U.S. Federal Trade Commission (FTC) may file an antitrust lawsuit to block Microsoft’s $69 billion USD for purchases lawsuit against video game publisher Activision Blizzard, three people familiar with the matter said.

Whether the FTC will initiate the lawsuit has yet to be determined, and the FTC's four commissioners have yet to vote on the complaint or meet with the companies' lawyers, two of the people said. However, FTC staff reviewing the deal were skeptical of the companies' arguments, these people said.

The investigation is still ongoing, but much of the heavy lifting has already been done, including the forensics of Microsoft Chief Executive Satya Nadella and Activision chief Bobby Kotick, these people said. If the agency does pursue an investigation, it could happen as soon as next month, these people said.

At the heart of the FTC's focus is whether the Activision acquisition would give Microsoft an unfair boost in the video game market. Microsoft's Xbox came in third ahead of industry leader Sony Interactive Entertainment and its PlayStation gaming console. However, Sony has emerged as a major opponent of the deal, telling the Federal Trade Commission and regulators in other countries that it would be at a clear disadvantage if Microsoft allowed popular games such as Call of Duty to be exclusive to its platform.

The FTC declined to comment.

In a statement outlining Sony's position submitted to the U.K. Competition and Markets Authority in October, which was made public on Wednesday, Sony said the deal would not only damage its ability to Consumers have fewer choices when it comes to games, and developers have fewer choices when it comes to publishing games. Sony said,

Microsoft is a 'tech titan', buying irreplaceable content at undisputed prices ($68.7 billion), driving competitive advantage to itself.

In its own statement issued by the U.K. regulator on Wednesday, Microsoft accused Sony of making self-deluded claims to maintain its number one position in gaming, Sony, the current market leader with clear and enduring market power, may lose It's just not credible to claim that the Xbox was beaten by the weakest of the three console contenders for just one game.

Microsoft says it has made multiple commitments to keep Call of Duty on Sony's PlayStation, and that the game isn't what Sony says it needs to be. Additionally, Microsoft pointed out that the game isn't currently available on any subscription service, and adding it to the Xbox service in the future won't hurt Sony.

To a lesser extent, Google is also an opponent of the deal, according to two people familiar with the matter. The company believed that owning Activision would further incentivize Google's Chrome OS to deliberately lower the quality of its Game Pass subscription service, ultimately steering hardware sales toward Microsoft and away from Google, these people said.

Google is a small player in the gaming industry and is winding down its own online gaming service, Stadia. However, it has come under antitrust scrutiny around the world, including for its conduct in the gaming market.

A Google spokesman declined to comment.

Microsoft has committed to continuing to offer Call of Duty on Sony's Playstation console and recently made an offer to make the game available to Sony for the next 10 years, and it's unclear how Sony will respond to that offer.

However, the FTC's concerns extend beyond Call of Duty, and investigators are trying to determine how Microsoft is using future unannounced titles to boost its gaming business, according to two people briefed on the review.

Activision spokesman Joe Christinet said,

any suggestion that this transaction could have anti-competitive effects is completely absurd. We are committed to continuing to work with regulators around the world to allow the transaction to proceed, but we will not hesitate to fight to defend it.

Activision also disputes Epic's allegations.

Christinat said,

Epic's allegations are nonsense, we can confirm that Google has never asked us, pressured us, or made us agree not to compete with Google Play we have submitted documents and testimony.

Microsoft spokesman David Cuddy said the company is ready to address the concerns of regulators, including the FTC, and Sony to ensure the transaction closes with confidence. After the transaction closes, we will remain behind Sony and Tencent in the market. Together, Activision and Xbox will benefit gamers and developers, making the industry more competitive.

Technically, the FTC does not need to take any action at this time. Regulators in Europe and the U.K. have also recently launched deep investigations, meaning the companies won't be able to close deals until spring at the earliest. That means that if the FTC does sue, it will likely bring the case to its own internal administrative court.

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