Activision + Microsoft: FTC considers contesting acquisition

and the soap opera Activision Blizzard 🇧🇷 Microsoft continues: according to sources found by the site Politicala FTC (Federal Trade Commission, or Federal Trade Commission), one of the bodies in the United States that oversees the free market and competition, would be preparing to open an antitrust lawsuit, in order to challenge, and prevent, the acquisition of the game studio by the giant of Redmond.

According to sources, those responsible for preparing the action are “skeptical” about the arguments of Microsoft and Activision, that the deal does not represent a serious threat to fair competition in the games market.

Activision headquarters in Santa Monica, California (Credit: Handout/Activision Blizzard)

Activision headquarters in Santa Monica, California (Credit: Handout/Activision Blizzard)

The purchase, closed in January 2022 for US$ 68.7 billion, is the largest ever made in the games industry, and the largest payment in kind (cash) regardless of the sector. The deal would make Microsoft the third-largest company in the industry, behind Tencent and Sony, and add powerful brands like call of duty🇧🇷 World of Warcraft🇧🇷 diablo🇧🇷 Overwatch and others, to its already immense portfolio.

In addition expertise of King in mobile markets, with titles such as candy Crushwill provide Microsoft with dominance in what is now the largest sector of the market, and the one that earns more than the other parts (consoles, PC) combined.

Such a deal would never go unnoticed by regulatory bodies, so much so that the UK Competition and Markets Authority (CMA) and the European Commission have already expressed concerns about the purchase. In both cases, the arguments are the same: the purchase of Activision represents a serious threat to maintaining balanced competition, both between console manufacturers and between developers and operating systems.

In its latest report, the CMA states that the deal directly affects British studios and systems, and disparages direct competitors such as Sony and Nintendo, and that the current internet moment, in which ultra-fast connections are becoming more accessible, favors proper implementation. game streaming services.

Microsoft, combined with the catalog of studios such as Activision, Bethesda, Mojang, Double Fine, Ninja Theory and others, the Xbox Game Pass and Cloud Gaming services, and its cloud infrastructure via Azure, would have the means to make its platforms, Xbox and Windows, the most viable for developers, big and small, who want to distribute their games and profit a lot from them.

The European Commission’s argument is similar. The understanding is that Microsoft would not only harm the local market of studios, but would unbalance the balance of the market in its favor, in which AAA and independent developers would understand that Redmond, with franchises of global appeal in its pocket, would attract much more public to buy consoles and Windows PCs.

Over time, these would become less likely to develop for PlayStation and Nintendo systems, because the investment would not pay off.

CMA, European Commission and FTC are not buying arguments that the acquisition will not harm the market (Credit: Disclosure/Microsoft)

CMA, European Commission and FTC are not buying arguments that the acquisition will not harm the market (Credit: Disclosure/Microsoft)

The (more than anticipated) fiasco of Google Stadia, and the limited scope of competitors such as Amazon Luna, Nvidia GeForce Now, and PS+Premium, indirectly favor Xbox Game Pass and Cloud Gaming, which works well on fast networks, and is available in more regions than its competitors.

Microsoft argues that it is not interested in preventing Activision from developing for other platforms, and even pointed out the hypocrisy of Sony, in that it has more audience, and sells more PS5 consoles, in a ratio of approximately 3:2, when compared to Xbox Series X|S line.

Likewise, it weighs against Sony that it only recently started shipping its exclusives on PC, and they arrive a year behind their original PS5 release; on the Xbox + Windows platform, when available, availability on both systems is immediate, and with cross-buy, which the Japanese giant does not practice, as it makes its games available on third-party stores, such as Steam and the Epic Games Store.

Exchange of accusations aside, the FTC would be the third regulator in the market that is initially positioned against the acquisition. According to Politicalboth Satya Nadella and Bobby Kotick, respectively CEOs of Microsoft and Activision Blizzard King (ABK), could be called to testify if the antitrust lawsuit goes ahead.

Since the FTC revised the rules for mergers and acquisitions, as part of an effort by the Joe Biden government to prevent the concentration of power in the hands of a few conglomerates, the body has already run into trouble with Meta, and is barring the purchase of Within, of VR solutions for fitness, and gave Sony a hard time when it took a deep look at the Bungie acquisition, even though it was later authorized.

The understanding is that under Lina Khan, the FTC has become a much less lenient body with acquisitions, especially in the technology market. Of course, Bungie is not such a big studio, and it would be very difficult for the agency to block the purchase, even if Sony’s interest in the company’s experience with online services, and not in destiny 2but the Activision buyout is a much bigger deal, by all accounts.

Lina Khan, chairman of the FTC, has put the agency in Zero Tolerance mode with tech giants (Credit: Graeme Jennings-Pool/Getty Images)

Lina Khan, chairman of the FTC, has put the agency in Zero Tolerance mode with tech giants (Credit: Graeme Jennings-Pool/Getty Images)

On the side of those interested in completing the negotiation, both Microsoft and Activision (especially Bobby Kotick, who can make a lot of money) believe that even with the FTC, CMA and European Commission not initially being tolerant, the acquisition should be completed by June 2023, estimated time for a decision to be made. Still, both shouldn’t wait for a walk in the park.

It is worth remembering that China, which also has weight in regulating the market, and was the first country to block the purchase of ARM by Nvidia, has not made any statement about the case so far; CMA recently forced Meta to sell Giphy; and everyone knows the European Commission’s usual ill will, led by the hard-line Commissioner Margrethe Vestager (Lina Khan is often compared to her), towards US companies operating in the Old World.

Of course, the information gathered by the Political does not mean that the FTC will file a lawsuit against the acquisition, but that they would be considering doing so, and that even if positive, it does not mean that Activision will not be absorbed by Microsoft. But from the floor of the carriage, it’s clear that closing the deal won’t be easy.

Source: Politico

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