FTC plans to block Microsoft’s acquisition of Activision Blizzard

The US Federal Trade Commission (FTC) has filed a complaint to block Microsoft from acquiring video game developer Activision Blizzard and its blockbuster gaming franchises such as Call of Duty. The FTC alleged that the US$69 billion deal would enable Microsoft to "suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business". News of the acquisition broke in January this year.

The FTC pointed to Microsoft’s record of acquiring and using gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of video game firm Bethesda Softworks. Microsoft decided to make several of Bethesda's titles, including Starfield and Redfall, Microsoft exclusives. This was despite assurances given to European antitrust authorities that it had no incentive to withhold games from rival consoles.

“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 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," she added.

Microsoft’s Xbox Series S and Series X are one of only two types of high-performance video game consoles. According to FTC's complaint, Microsoft also offers a video game content subscription service called Xbox Game Pass, as well as a cloud-based video game streaming service.

Activision is known for creating popular titles including Call of Duty, World of Warcraft, Diablo, and Overwatch, and according to the FTC, has millions of monthly active users globally. Microsoft said in January that the acquisition will also provide building blocks for the metaverse and turn the tech giant into the world’s third-largest gaming company by revenue, behind Tencent and Sony.

However, FTC is now saying that if the deal is allowed to proceed, Microsoft would have both the means and motive to harm competition now that it has control over Activision’s blockbuster franchises. This could possibly be done by manipulating Activision’s pricing; degrading Activision’s game quality or player experience on rival consoles and gaming services; changing the terms and timing of access to Activision’s content; or withholding content from competitors entirely, resulting in harm to consumers.

MARKETING-INTERACTIVE has reached out for a statement.

Separately, on the advertising front, Microsoft was appointed by Netflix as its tech and sales partner to aid in its first ad-supported subscription offering in July. All ads served on Netflix will be exclusively available through the Microsoft platform.  While competitors such as Google or Comcast have their own streaming platforms such as YouTube and Peacock respectively, Microsoft did not own one. Safe to say, its partnership with Netflix can potentially give the tech giant the firepower it needs to break into the streaming space.

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