US FTC sues to block Microsoft’s Activision Blizzard acquisition

09 December 2022


US Federal Trade Commission
Image credit: US Federal Trade Commission (FTC)

The US Federal Trade Commission (FTC) has filed a legal complaint seeking to block Microsoft’s pending acquisition of game publisher Activision Blizzard.

The FTC alleged that Microsoft, already a gaming giant via Xbox, could harm competition in the console and subscription services market.

The agency’s four commissioners voted 3-1 to issue the complaint. The FTC — the US’ competition authority — said it issues an administrative complaint when it has reason to believe that the law has been or is being violated, and it appears a proceeding is in the public interest.

Microsoft agreed to acquire Activision Blizzard for $68.7bn (~£50.5bn) in January in what would be the largest ever deal in gaming industry history. The publisher owns and runs multiple esports titles, including Overwatch, Call of Duty League, StarCraft and others.

The FTC argued that if Microsoft were to acquire Activision Blizzard, it would enable the company to suppress competitors to its Xbox consoles, its subscription content, and cloud-gaming business by ‘denying rivals’ access to its popular content’.

In the complaint, the FTC alleged Microsoft had a record of acquiring gaming content to suppress competition from rival consoles, citing Bethesda parent ZeniMax as an example. 

Activision, FTC said, is one of only a handful of developers that publish popular high-quality video games on multiple platforms. An acquisition by Microsoft would change that, giving the tech giant the ‘means and motive’ to harm competition by favouring its own platform.

The move follows a New York Post report claiming as recently as December 4th that an internal rift at the FTC stirred hope for Microsoft that the deal to go through. Politico had reported on Novemeber 23rd that the deal was likely to be challenged by the FTC.

The high-profile merger has already been approved by regulators in Serbia, Brazil and Saudi Arabia, but antitrust regulators in the European Union and UK are reportedly scrutinising the deal.

In a statement on Twitter, Brad Smith, Vice Chair and President of Microsoft, said: “We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers.”

In esports, Activision Blizzard most notably runs the Overwatch League (OWL) and Call of Duty League (CDL), two major franchised esports leagues that the publisher sold slots in for tens of millions of dollars.

The publisher has been under intense legal and public pressure since 2021, when a handful of claims and lawsuits were filed alleging a toxic workplace culture and rife sexual harrassment.

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

“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.”

Jake Nordland
Jake has worked at Esports Insider as a journalist and editor since early 2021. Now ESI's Media Manager, he continues to act as lead editor of print magazine The Esports Journal, and contributes his words to the website from time to time.