The US Federal Trade Commission wants to block Microsoft Corp.'s $69 billion acquisition of Activision Blizzard Inc., saying that the tie-up between the Xbox maker and popular gaming publisher would harm competition.
Regulators said Microsoft's ownership of Activision could hinder competition in the gaming market, worth more than $200 billion, by limiting rivals access to the company's biggest games.
According to Holly Vedova, director of the FTC's Bureau of Competition, Microsoft has already shown that it can and will withhold content from its gaming rivals. Today we want 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. Activision shares fell by as much as 3.9% on the news. Microsoft's shares were little changed.
The complaint was filed in its in-house court with a 3 - 1 vote by the commission.
Microsoft's proposed Activision Blizzard deal is one of the 30 biggest deals of all time and one of the biggest deals of all time. Microsoft, maker of Xbox consoles, would get a lot of the most popular video game titles, such as Call of Duty and World of Warcraft. The latest of the Call of Duty franchise - Warzone II - was the top-selling video game last year, according to data from The NPD Group. The Xbox-maker already owns the Halo franchise and Minecraft virtual-world building game.
The FTC lawsuit is part of a effort by FTC Chair Lina Khan to more aggressively police mergers, particularly those by the biggest tech platforms. Since President Joe Biden has appointed her to oversee the agency in June 2021, the agency has killed mergers between Lockheed Martin Corp. and Aerojet Rocketdyne Holdings Inc. as well as Nvidia Corp. s bid to buy Softbank Group Corp.'s ARM. Although Brazilian antitrust officials cleared it in October, other competition regulators, including the UK and the European Union, have raised concerns. The two competition authorities aren't expected to make decisions on the deal until next year.
Microsoft has announced on Tuesday that it will bring Call of Duty to the Steam PC gaming platform and Nintendo consoles. The company said it also offered a proposal that would keep Call of Duty on Sony's Playstation for the next 10 years, but the Japanese electronics giant has so far rebuffed efforts to come up with a resolution.
The Redmond, Washington tech giant tried to placate possible labor concerns about the merger by reaching an agreement with the Communications Workers of America, which also represents workers in the gaming industry. If employees expressed interest in joining a union, Microsoft pledged to take a neutral approach.
The company said it would stop using non-compete or confidentiality clauses to prevent workers from talking about discrimination or harassment as part of a settlement or separation deal.
The FTC has raised concerns about the use of non-competes and the impact of mergers on labor conditions.
The agency's in-house proceedings, overseen by Administrative Law Judge D. Michael Chappell, take a number of months to resolve.
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