By Daniel Howley
The Federal Trade Commission is about to file a lawsuit against Microsoft’s planned acquisition of “Call of Duty” maker Activision Blizzard (ATVI).
Until the FTC concludes its lawsuit against the deal, the Xbox maker cannot complete its deal to buy Activision Blizzard, Bloomberg reports.
Activision Blizzard’s $69 billion deal was initially challenged by the FTC in December 2022, saying it would enable Microsoft to suppress rivals to its Xbox gaming consoles and subscription content businesses.
Microsoft can still finalize the acquisition while it fights the FTC in court. Filing a federal lawsuit would stop Microsoft from closing the deal until the FTC’s own suit is over.
As well as the US, the UK’s Competition and Markets Authority has also objected to the deal, citing fears that Microsoft would have too much control over the gaming market. Microsoft is appealing.
It would be hugely beneficial for Microsoft’s gaming business to acquire Activision Blizzard. One of the most popular franchises in the video game industry is “Call of Duty,” which would generate billions of dollars for Microsoft’s Xbox unit. In its first 10 days on the market, “Call of Duty: Modern Warfare II” brought in $1 billion.
In addition to “Call of Duty,” Microsoft will be able to offer Activision Blizzard’s various franchises via its Xbox Game Pass subscription service, which lets gamers download hundreds of games every month. A $15 per month subscription to Game Pass includes Microsoft’s cloud gaming service, which lets you stream games to devices ranging from smartphones to smart TVs while playing on your console.
As cloud gaming evolves – Microsoft refers to its platform as a beta – Microsoft wants it to become the de facto means for users to play in the future. Building up Game Pass would then give Microsoft first-mover advantage.
In the cloud gaming market, Microsoft is already beating Sony (SONY) and Nvidia (NVDA) with 60% to 70% share, according to the UK’s Competition and Markets Authority. It would become even more dominant if Activision Blizzard was added to the pool.
As for Activision Blizzard’s King mobile gaming line, which includes “Candy Crush Saga,” adding that would place Microsoft in one of the fastest-growing gaming markets.
It’s still possible for Microsoft to overcome the FTC’s lawsuit, but the commission isn’t looking to make things easier for it.
Regulators aren’t just targeting Microsoft. According to reports, European Union regulators intend to target Alphabet’s lucrative ad tech business. A report from Bloomberg said the regulator is expected to file an antitrust complaint against Google disputing the legality of its business unit, which is expected to generate about 80% of the company’s revenue by 2022.
Google’s ad sales accounted for about $225 billion of the $278.6 billion market where it controls most of the technology for buying, selling, and serving ads online. In 2021, the company will earn $209.5 billion from this field.
