The US antitrust authority FTC wants to block the mega-acquisition of computer game maker Activision Blizzard by software company Microsoft. On Thursday, the agency filed a lawsuit against the planned billion purchase.
"Microsoft has already proven it can and will hide content from its gaming competitors," Holly Vedova, FTC director of competition, said in a statement. "Today, we want to stop Microsoft from taking control of a leading independent game studio and using it to harm competition in several dynamic and fast-growing gaming markets."
Microsoft has announced that it intends to defend the takeover in court. "We continue to believe this deal will increase competition and create more opportunities for gamers and game developers," Microsoft President Brad Smith said Thursday. “We have been committed to addressing competition law issues since day one.”
Among other things, Microsoft announced that Activision's acclaimed Call of Duty game will continue to be available without restrictions on gaming platforms controlled by Microsoft's competitors. The action game is considered one of the most successful video games of all time. Activision's total revenue is estimated at billion.
In the letter, Activision boss Bobby Kotick was confident the takeover would stand up in court: "We believe we will win."
FTC Chair Lina Khan took office with the goal of gaining more control over the tech industry. “You can expect extensive lawsuits. We will definitely focus our resources on litigation,” she said in a June interview with The New York Times.
In December 2021, Khan's regulator objected to Nvidia's billion takeover of chip developer Arm. It would be the largest merger in the chip industry. However, before proceedings could begin, both companies abandoned their purchase plans.
Therefore, it is not clear how the case between Microsoft and the FTC will end. The US is not the only country expressing takeover concerns. The EU and UK competition authorities have classified the merger as potentially anti-competitive. However, the FTC became the first agency to file a lawsuit against the merger.
Microsoft has set the purchase price at around billion. After deducting Activision's net cash, the business is valued at .7 billion, according to Microsoft.
Microsoft wants to expand its PC games business by acquiring the maker of games like Call of Duty and Candy Crush. This will make the group number three in the world after China's Tencent and Japan's Sony. The software company hopes this purchase will make its Xbox gaming platform more influential.
In recent years, Microsoft has often invested heavily in game companies and bought Minecraft maker Mojang Studios, among other things.