DealLawyers.com Blog

Yesterday, the FTC voted to file an administrative complaint to block Microsoft’s proposed acquisition of video game titan Activision-Blizzard.  According to the FTC’s press release, Microsoft “has already shown that it can and will withhold content from its gaming rivals,” and this excerpt says that was a big factor in the decision to oppose the deal:

Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has millions of monthly active users around the world, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.

But that could change if the deal is allowed to proceed. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.

The FTC voted 3-1 to initiate this action, with Commissioner Wilson dissenting. As Axios pointed out, it’s worth noting that the FTC filed the case in its own administrative court and isn’t seeking a preliminary injunction, which means that the parties would still theoretically be able to close the deal, assuming that they’re willing to risk subsequently having it unwound – and assuming that no other regulator puts the kibosh on it.

If you’re interested in what obligations the parties have under the merger agreement when it comes to regulatory issues, check out this blog that I wrote at the time the deal was signed up.

– John Jenkins