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FTC suing to block Microsoft's $69bn Activision Blizzard acquisition

UPDATE: Microsoft responds.

Artwork from Crash Bandicoot, Call of Duty, Tony Hawk, and Overwatch, displayed in four columns running left to right.
Image credit: Activision Blizzard

UPDATE 8pm: Microsoft has responded to the FTC's announcement of a lawsuit to block its $69bn acquisition of Activision Blizzard.

"We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers," Microsoft's vice chair and president Brad Smith said in a statement. "We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC."

"While we believed in giving peace a chance," Smith concluded, "we have complete confidence in our case and welcome the opportunity to present our case in court.”

ORIGINAL STORY 7.30pm: The United States government's Federal Trade Commission is suing to block Microsoft's $69bn USD acquisition of Activision Blizzard, claiming the deal would allow the company to suppress its games industry competition.

In a news release announcing the lawsuit, the FTC pointed to Microsoft's acquisition of ZeniMax in 2021, and the company's subsequent decision to make games from its subsidiaries - namely Bethesda's Starfield and Redfall - exclusive to Microsoft devices, despite previously assuring European regulators 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," the FTC's director of bureau competition Holly Vedova said in a statement. "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."

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The FTC goes on to say Activision Blizzard is "one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices", before noting the publisher's titles - which include the likes of Call of Duty, Overwatch, and World of Warcraft - currently attract 154 million monthly active users between them.

"But that could change if the deal is allowed to proceed," the FTC's statement continues. "With control over Activision's blockbuster franchises, Microsoft would have both the means and motive to harm competition 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."

A report by The Washington Post expands on the FTC's arguments, saying its lawsuit adds the Activision Blizzard deal would give Microsoft an unfair advantage - and dampen innovation - in areas such as gaming subscription services and cloud gaming.

The FTC is the first regulator to attempt to block Microsoft's acquisition of Activision Blizzard; several other countries, including Saudi Arabia and Brazil, have already approved the deal.

However, the acquisition currently remains under close scrutiny in both the UK and Europe, where each regulatory body is independently set to announce the findings of a more "in-depth" phase 2 review of the proposal early next year.

Today's announcement follows last-ditch efforts by Microsoft to assuage regulatory fears around its acquisition, with the company earlier this week announcing it had agreed a 10-year deal to bring Call of Duty to Nintendo consoles if its buyout went through. It was also reported to have offered the same commitment to PlayStation, although Sony was said to be "as excited about this deal as Blockbuster was about the rise of Netflix".

On Monday, the New York Post claimed the FTC had softened its stance on blocking Microsoft's proposed acquisition of Activision Blizzard and that the deal was now looking more likely to pass. This, clearly, wasn't the case.