Microsoft/Activision Blizzard merger ‘likely’ to face FTC argument, report says

Microsoft’s chances of completing its $70 billion acquisition of Activision Blizzard look a little slimmer this week. Citing three sources familiar with the matter, Politico reports that the US Federal Trade Commission (FTC) is “likely” to try to block the deal with an antitrust argument.

The news comes as the deal faces tough scrutiny from UK and European Union regulators as well. Governments around the world are keen to rein in the power of big tech companies, and Microsoft’s gaming power move presents them with a big target. FTC chair Lina Khan has been outspoken in her opposition to potential tech monopolies.

Politico’s sources say the decision has not yet been made, but that “the FTC staff reviewing the deal are skeptical of the companies’ arguments.”

Meanwhile, the war of words between Sony and Microsoft over the deal took an absurd turn Wednesday when the UK regulator, the Competition and Markets Authority, released clashing statements the two companies had made to its investigators in October. Sony is pleading with regulators to block the deal, saying Microsoft controlling Activision Blizzard, and particularly the Call of Duty franchise, will kill off competition in the games market.

Both companies were put in the unusual position of being motivated to argue that their opponents are much more successful than they are, and bent over backwards to present themselves as the scrappy underdog.

“The suggestion that the incumbent market leader, Sony, with clear and enduring market power, could be foreclosed by the smallest of the three console competitors, Xbox, as a result of losing access to one title, is not credible,” Microsoft protested. (It has also strenuously denied that it would do such a thing in the first place; Microsoft gaming chief Phil Spencer said Call of Duty would remain on PlayStation “as long as there’s a PlayStation out there to ship to,” while the company told the New York Times it had offered Sony a further 10 years of Call of Duty games.)

Microsoft also generously claimed that its own exclusive games were rubbish compared to Sony’s. “Sony has more exclusive games than Microsoft, many of which are better quality,” it said, citing “iconic first-party franchisessuch as God of War and Uncharted. PlayStation had “nearly fives times as many” exclusive titles as Xbox.

Sony’s answer was to trash-talk its own subscription service. “Game Pass leads PlayStation Plus significantly,” it moaned. “Microsoft already has a substantial lead in multi-game subscription services. Game Pass has 29 million subscribers to Xbox Game Pass console and Xbox Game Pass Ultimate, and is expected to grow substantially in the future. The multi-game subscription tiers of PlayStation Plus considerably lag,” it humbly added.

Sony also took pot shots at EA’s Battlefield series in passing, as it was arguing that Call of Duty is too popular in its field to compete with, should Microsoft make it exclusive. “Even assuming that SIE had the ability and resources to develop a similarly successful franchise to Call of Duty,” Sony said, “it would take many, many years and billions of dollars to create a challenger to Call of Duty – and the example of EA’s Battlefield shows that any such efforts would be more than likely be unsuccessful.” Shots fired!

Microsoft is aiming to complete its acquisition of Activision Blizzard at some point before the middle of 2023.

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