The Federal Trade Commission (FTC) has filed a lawsuit to block the purchase of leading video game developer Activision Blizzard and its video games, including Call of Duty, by technology giant Microsoft. The US watchdog alleges the $69 billion deal, the biggest ever for Microsoft and the biggest ever in the video game industry, would allow the tech giant to suppress competitors from its Xbox game consoles and its subscription content business. and cloud gaming, which is growing rapidly.
The decision was taken by three votes to one and is the regulator’s biggest challenge against the consolidation of the technology giants. The FTC, tasked with policing competition, has taken an aggressive approach since US President Joe Biden appointed Lina Khan as its chair. Rather than seek deals and compromises to facilitate mergers, the FTC has been willing to fight in court to veto them.
In a lawsuit published Thursday, the FTC points to Microsoft’s history of acquiring and using valuable game content to suppress competition from rival consoles, including its acquisition of ZeniMax, the parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several Bethesda titles, such as Starfield and Redfall, Microsoft exclusives, despite having assured European antitrust authorities that it had no incentive to withhold games from rival consoles.
“Microsoft has already shown that it can and will retain content from its rivals in the video game industry,” Holly Vedova, director of the FTC’s Office of Competition, said in a statement. “Today we seek to prevent Microsoft from taking control of a major independent game studio and using it to undermine competition in multiple fast-growing and dynamic gaming markets.”
Microsoft offers a leading subscription service for gaming content called Xbox Game Pass, as well as a leading game streaming service in the cloud. The purchase of Activision was considered the key to turning Microsoft into the Netflix of video games and for this reason it aroused reluctance from the beginning. Also, Microsoft’s Xbox Series S and Series X are one of only two types of high-performance video game consoles.
“Gaming is the most dynamic and exciting category of entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, Microsoft CEO, in announcing the transaction in January.
Activision is one of the few giant video game developers in the world. In its catalog are some of the most emblematic and popular video game titles, such as Call of Duty, World of Warcraft, Diablo Y Overwatch. It has a total of 154 million monthly active users worldwide, according to the FTC complaint.
Activision’s current strategy is to offer its games on many devices, regardless of manufacturer, but according to the FTC, that could change if the deal is allowed to go ahead. “With control of Activision’s large franchises, Microsoft would have both the means and the motives to harm the competition by manipulating Activision’s prices, degrading the quality of Activision’s games or the player experience on consoles and gaming services. rivals, changing the conditions and timing of access to Activision’s content or completely withholding competitors’ content, which would harm consumers,” he says.
The purchase also generates rejection among the competition authorities of the European Commission, before which Microsoft has not offered palliative measures to overcome reluctance. Investors have long been wary of a successful deal and Activision shares are trading far short of the $96 per share Microsoft offer.
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