The FTC announced Thursday that it is filing a lawsuit to block Microsoft’s acquisition of gaming giant Activision Blizzard. Microsoft announced plans to buy the company, which has been plagued by allegations of sexual harassment and discrimination and labor disputes, in January for $68.7 billion.
The deal would mark a seismic shift in the games industry – Activision Blizzard owns massively popular games like the Call of Duty franchise and World of Warcraft – but the sheer size of the deal and the prevailing anti-consolidation sentiment meant it was appropriate was for intensive regulatory oversight from day one.
In its statement, the FTC cites concerns that the deal would “allow Microsoft to suppress competitors” for Xbox, including its paid Game Pass subscription service and cloud gaming services.
“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. “Today we are trying to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
PlayStation maker Sony, Microsoft’s console rival, has vehemently objected to the proposed merger, which would consolidate some of the world’s most popular games under the Xbox banner. In recent weeks, Microsoft has attempted to stave off the regulatory threat, promising to give Call of Duty equal treatment on the PlayStation and even agreeing to bring the franchise to Nintendo if the deal goes through.
Microsoft president Brad Smith weighed in on the FTC’s decision on Thursday, saying the deal would create new opportunities rather than stifling competition.
This story is evolving.