FTC Sues Microsoft to Block $69B Activision Blizzard Acquisition

Michael McWhertor, reporting for Polygon:

The U.S. Federal Trade Commission is suing Microsoft over its planned $68.7 billion acquisition of Activision Blizzard, saying that the deal “would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.”

In a news release, the FTC said that Microsoft has a record of “acquiring and using valuable gaming content to suppress competition from rival consoles,” pointing to the company’s $7.5 billion acquisition of ZeniMax Media, the parent company of Bethesda Softworks. The FTC noted Microsoft’s plan to keep next year’s Starfield from Bethesda Game Studios and Redfall from Arkane as Microsoft exclusives. Those games will be available on Xbox platforms and Windows PC, and the company’s Game Pass subscription service.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition, in a news release. “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.”

We’ll see how it plays out, but my gut feeling is that this is a mistake on the FTC’s part. The video game industry is incredibly competitive today. Yes, Xbox and PlayStation are the only two high-end consoles, but the Switch is quite arguably Nintendo’s most successful platform ever. And it’s not like Sony is some shrinking violet and lacks for its own exclusive titles. Exclusive titles are a big part of competition. It’s also the case that the dominant players in console and PC gaming are not the dominant players in mobile gaming (Apple and Google). Let the market play this out, I say.

My skepticism about this proposed acquisition isn’t about anticompetiveness but simply that I don’t see how Activision Blizzard is worth $69B. That’s Microsoft’s problem, not the FTC’s.

★ Friday, 9 December 2022