FTC sues to block MicrosoftActivision Blizzard merger

The Federal Trade Commission on Thursday sued to block Microsoft’s planned $69 billion takeover of video game company Activision Blizzard, saying it could suppress competitors to Microsoft’s Xbox game console and its growing games subscription business.

The FTC’s challenge could be a test case for President Joe Biden’s mandate to scrutinize big tech mergers. The commission voted 3-1 to issue the complaint after a closed-door meeting, with the three Democratic commissioners voting in favor and the sole Republican voting against.

The complaint points to Microsoft’s previous game acquisitions, especially of well-known developer Bethesda Softworks and its parent company ZeniMax, as an example of where Microsoft is making some upcoming game titles exclusive to Xbox despite assuring European regulators it had no intention to do so.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said a prepared statement from 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.”

The FTC said it was filing the complaint through its administrative process rather than taking the case to a federal court. An administrative law judge it set to hear evidence but not until August 2023, according to the complaint.

Microsoft’s president, Brad Smith, signaled in a statement Thursday that the company is likely to challenge the FTC’s action.

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