Microsoft/Activision Blizzard merger ‘likely’ to face FTC lawsuit, report says

Microsoft’s chances of completing its $70 billion acquisition of Activision Blizzard look a little slimmer this week. Citing three sources familiar with the matter, Politico reports that the U.S. Federal Trade Commission is “likely” to try to block the deal with an antitrust lawsuit.

This news is coming as the deal comes under intense scrutiny by U.K. regulators and European Union regulators. Governments around the world are keen to rein in the power of big tech companies, and Microsoft’s gaming power move presents them with a big target. Lina Khan (FTC Chair) has spoken out against potential tech-monopolies.

Politico’s sources say the decision has not yet been made, but that “the FTC staff reviewing the deal are skeptical of the companies’ arguments.”

The war of words between Microsoft and Sony over the deal turned absurd Wednesday, when the Competition and Markets Authority in the United Kingdom released contradictory statements that the companies made to it back October. Sony has asked regulators to stop the deal. They claim that Microsoft’s control of Activision Blizzard and the Call of Duty franchise will eliminate competition in the gaming market.

Each company was put in the unique position of having to claim that others are more successful than them. They were motivated to make their case and pushed themselves to be the underdog.

“The suggestion that the incumbent market leader, Sony, with clear and enduring market power, could be foreclosed by the smallest of the three console competitors, Xbox, as a result of losing access to one title, is not credible,” Microsoft protested. (It has also strenuously denied that it would do such a thing in the first place; Microsoft gaming chief Phil Spencer said Call of Duty would remain on PlayStation “as long as there’s a PlayStation out there to ship to”, while the company told the New York Times it had offered Sony a further 10 years of Call of Duty games.)

Microsoft also generously claimed that its own exclusive games were rubbish compared to Sony’s. “Sony has more exclusive games than Microsoft, many of which are better quality,” it said, citing “iconic first-party franchises” Uncharted, God of War, and others. PlayStation had “nearly fives times as many” exclusive titles as Xbox.

Sony’s answer was to trash-talk its own subscription service. “Game Pass leads PlayStation Plus significantly,” it moaned. “Microsoft already has a substantial lead in multi-game subscription services. Game Pass currently has 29 million Xbox Game Pass Ultimate subscribers and Xbox Game Pass console customers. This number is likely to rise significantly in the near future. The multi-game subscription tiers of PlayStation Plus considerably lag,” it humbly added.

Sony also took pot shots at EA’s Battlefield series in passing, as it was arguing that Call of Duty is too popular in its field to compete with, should Microsoft make it exclusive. “Even assuming that SIE had the ability and resources to develop a similarly successful franchise to Call of Duty,” Sony said, “it would take many, many years and billions of dollars to create a challenger to Call of Duty – and the example of EA’s Battlefield shows that any such efforts would more than likely be unsuccessful.” Shots fired!

Microsoft aims to close Activision Blizzard’s acquisition sometime before 2023.