The Federal Trade Commission (FTC) has recently taken steps to block Microsoft’s proposed acquisition of video game giant Activision Blizzard, claiming that the merger could lead to higher video game prices and fewer innovative offerings in the marketplace. The FTC announced its opposition to the acquisition on antitrust grounds on February 5th.
The attempted merger would combine Microsoft’s Xbox and PC gaming divisions with Activision Blizzard, one of the leading publishers in the video game industry. Microsoft and Activision Blizzard maintain that the merger will create a “worldwide leader in interactive entertainment.” The combined companies would control a large portion of the market for video games, with the top five titles on Steam, an online platform for PC game downloads, accounting for 39 percent of the total market.
The FTC alleges that the deal would give Microsoft and Activision Blizzard the ability to raise prices and hinder competition by making it difficult for smaller game developers to access the market. Additionally, the FTC is concerned that the merger would reduce incentives for the companies to continue innovating, as they would no longer face the same competitive pressure.
Microsoft and Activision Blizzard have responded to the FTC’s assertion with a statement noting their disappointment in the decision and further stating that the companies “strongly believe [the proposed deal] would benefit gamers, developers and content creators, empowering the experiences that drive shared passion and community engagement.”
Microsoft and Activision Blizzard have argued that the combined companies would be an even more powerful force for innovation in the video game industry, with more resources for game development and marketing.
This legal battle is one of many between the tech giants and government agencies around the world. Last year, the European Commission blocked a merger between Foot Locker and Finish Line, while the Australian Competition and Consumer Commission blocked a merger between Milan Direct and Matt Blatt, two furniture stores.
The FTC’s decision on the Microsoft/Activision Blizzard merger is still pending, but this case underscores the importance of competition and consumer choice in the tech world. It also highlights the need for regulatory bodies to step in if it finds that a proposed merger could create an anti-competitive market. In any event, the litigation goes to show that, in the tech world, even the biggest companies must play by the rules.
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