No Call of Duty for Microsoft: the FTC should block the takeover of Activision/Blizzard

Microsoft’s $69 billion deal to buy Activision/Blizzard could be cancelled. The obstacle to going around in circles is the FTC, the powerful American regulatory authority which sees an abuse of its dominant position.

Microsoft could be deprived of Call of Duty… as well as all Activision/Blizzard licenses and franchises. After announcing one of the biggest acquisitions in history – $69 billion! – last January, Microsoft’s plan to suddenly strengthen its video game offer against Sony could come to an end because of the FTC.

The Federal Trade Commission (FTC), which is the American economic regulator, is preparing to open a judicial investigation to denounce the deal, according to Politico US sources. The FTC has already heard from Microsoft on the subject, a Microsoft playing the “challenge” card against a dominant Sony in the world of consoles which would have “better games” and more licenses. But these arguments did not fly. Because if Microsoft is well behind Sony, it is nonetheless a juggernaut which also benefits from the PC ecosystem with its Game Pass, while Sony is content to sell a few licenses on Steam.

Read also: Takeover of Activision Blizzard by Microsoft: the British competition authority opens an investigation (July 2022)

While the four FTC commissioners haven’t yet voted to launch the lawsuit, the bulk of the first part of the investigation has already been conducted – Microsoft’s CEO has already been interviewed – and many analysts believe that it won’t be long. An anti-trust action that will hurt Microsoft, two decades after those carried out against its dominant position in web browsers. Especially since since this period, Microsoft has played the card of openness both in the code (a lot of investment in open-source) and in the OS (integration of Linux in Windows 10/11).

What worries the FTC is that the acquisition of Activision/Blizzard would give too big a boost to an already very strong Microsoft. The video game developer and publisher has many licenses, such as Call of Duty, Candy Crush, World of Warcraft (and the entire Warcraft universe), StarCraft, Diablo and even Spyro. A concern shared by Sony, the main opponent of this merger.

Read also: Microsoft buys Activision Blizzard for $68.7 billion, its biggest takeover ever (January 2022)

Although number 1 in the sector, Sony believes that blocking the publication of a franchise like Call of Duty “would be a major disadvantage” for its platform. If Microsoft “swore that the game would still be launched on Sony consoles for the next decade – and the title is still not on the Game Pass (unlike the Doom license) – doubt persists as to the exclusive nature licenses. And Microsoft’s position as a player in operating systems (Windows) works against it. According to Politico US, alongside Sony and Epic Games, Google is also a very active opponent of this deal.

The authorities are careful to limit the emergence of superpowers

Based on the painting “Ship on Fire” by James Francis Danby (1816–1875). – The Astley Cheetham Art Collection (CC BY-NC)

The FTC is not the only one on the front: the European and British regulatory authorities are also examining this acquisition. With “mine canary”, the reaction of Sony. The deal could be done if the Japanese and the American manage to agree on the terms of the acquisition. But as the press notes, with the procedure ending in July 2023, any blocking action by the FTC as early as next January could simply derail the operation.

Read also: Nvidia would have given up its acquisition of ARM for 40 billion dollars (January 2022)

We see here the pressure put on by the regulatory authorities who, after years of relative calm, are beginning to raise their eyebrows on acquisitions of enormous amounts. In the field of semiconductors, it was the regulators who blocked the acquisition of ARM by Nvidia for no less than 40 billion dollars.

In both cases, it is still and always the risk of seeing the emergence of a player who could dominate the market and strangle its competitor that motivates the regulators. And in video games as in electronic components, the consolidation of super-players should make future large acquisitions of several tens of billions of dollars more and more difficult.

Source :

US Politics

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