US regulator asks court to block Microsoft’s $69bn deal to acquire video game giant Activision Blizzard
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FTC argues that the deal would give Microsoft’s Xbox exclusive access to Activision Blizzard’s games, leaving other players such as Sony’s PS and Nintendo out in the dark.
The US Federal Trade Commission (FTC) has asked a federal court on Monday (June 12) to block Microsoft’s $69 billion deal to acquire video game giant Activision Blizzard to avoid a monopoly in the gaming market. In December last year, the FTC sought to stymie the deal by approaching the in-house court. Now, FTC plans to approach the District Court for the Northern District of California to seek the restraining order before the deal’s July 18 deadline.
FTC believes that Microsoft’s acquisition of Activision Blizzard will shake up the country’s gaming sector and encourage Microsoft’s monopoly. According to FTC, purchasing Activision will give Microsoft’s Xbox exclusive access to the company’s games, leaving other players such as Sony’s PS and Nintendo out in the dark.
"A preliminary injunction is necessary to... prevent interim harm" while the FTC determines whether "the proposed acquisition violates US antitrust law," the regulator said in the filing.
In requesting the preliminary injunction at the Northern California District Court, the US government sought to prevent the companies from finalising the deal before a July 18 deadline.
What is Microsoft saying?
Microsoft has offered to sign a legally binding consent decree with the FTC, promising to provide "Call of Duty" games to rival companies, including Sony, for the next decade. Microsoft argues that the deal would benefit gamers and gaming companies alike.
In a statement, Microsoft President Brad Smith expressed the company's willingness to present its case in federal court, signalling its determination to overcome the regulatory challenge. Activision, however, has not issued a comment on the matter.
Microsoft facing regulatory hurdles in Britain also
This regulatory obstacle marks the latest hurdle for Microsoft's blockbuster deal with Activision, which has become a litmus test for whether tech behemoths can successfully complete major acquisitions amidst growing concerns about their market power.
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Earlier this year, the British Competition and Markets Authority (CMA) moved to block the deal, although regulators in the European Union granted approval for its continuation.
Smith had expressed disappointment with the CMA's decision, stating that it had undermined public confidence in technology in the UK.
Why is the Activision deal significant for Microsoft?
The global gaming market has experienced tremendous growth, with a worth of $202.64 billion in 2021, and it is expected to expand further at a compound annual growth rate (CAGR) of 10.2% from 2022 to 2030.
Factors such as innovation, technological proliferation, and the availability of both software and hardware have fueled this growth. In 2021, console devices accounted for approximately 31.0 per cent of the market's revenue share.
Furthermore, console devices are projected to witness the highest CAGR growth from 2022 to 2030 due to their advantages, including ease of use. Microsoft wants to emerge as a dominating player in the gaming industry to keep its rivals at bay, triggering monopoly concerns.
As the battle over the Activision deal intensifies, industry experts and stakeholders eagerly await the outcome, which could shape the future landscape of the gaming industry.
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