Lina Khan’s FTC Is Fighting With Microsoft Over Activision Blizzard Deal

The Federal Trade Commission (FTC) is suing to block Microsoft’s massive $69 billion acquisition of video game giant Activision Blizzard, which it says will hurt competition in the gaming market.

The move is the biggest move FTC Chairman Lina Khan has taken against a big tech company during her 18-month tenure. Since Khan’s surprise appointment as chairman of the Consumer Protection and Competition Authority in June 2021, many are not asking if Khan will block mergers, but when and which ones. Believing that, I have been watching which big tech mergers are aimed at.

The deal will be watched closely by media and tech companies who want to buy smaller players but are wondering how aggressive the Biden administration will be about this massive merger. The Justice Department successfully sued book publisher Random House this fall to stop it from buying rival Simon & Schuster, and has already halted much smaller mergers this fall. let me

Microsoft has managed to avoid most of the scrutiny and criticism its Big Tech peers have endured over the past few years. In the late 90’s and early 2000’s, there was a sense that Microsoft had already made a name for itself and had learned its lessons. An antitrust lawsuit from the Department of Justice nearly disbanded the company. Then Microsoft decided to make the biggest acquisition in its history and the history of gaming, and it can no longer be ignored.

The FTC lawsuit points to Microsoft’s track record of buying gaming companies and creating titles exclusively for Microsoft’s platforms, including the Xbox console and game subscription streaming service Game Pass. Activision makes some of the world’s most popular games, and Microsoft could make them more expensive or difficult, if not impossible, to play on competitors’ platforms. I claim there is.

“Microsoft has already demonstrated that it can and will withhold content from its gaming rivals,” said Holly Vedova, head of the agency’s Competition Bureau, in a statement. “Today, we are trying to stop Microsoft from taking control of major independent game studios and using it to undermine competition in multiple dynamic and fast-growing gaming markets.”

Microsoft says the acquisition will improve competition and make it great for consumers, a word the company’s president, Brad Smith, echoed today in response to the lawsuit.

“We continue to believe that the deal to acquire Activision Blizzard will increase competition and create more opportunities for gamers and game developers,” said Smith. murmured. he Added Microsoft tried to concede to the FTC to avoid litigation, but his company intends to fight the lawsuit and believes it will win.

Smith and Microsoft have been increasingly vocal about the various peace offers that have surfaced to appease Washington. Most of it centers around Activision’s blockbuster game franchise, Call of Duty. The company has repeatedly said it will continue to license Call of Duty to other platforms, most notably Sony, which also has game consoles with exclusive game licenses. And this week, Microsoft announced plans to bring Call of Duty to Nintendo’s Switch console.

Microsoft has some basic logic in its favor when it comes to Call of Duty. Cutting off a large portion of a game’s user base after they’ve bought it costs a lot of money. This is the same reason AT&T did not prevent other distributors from selling HBO subscriptions when AT&T previously owned what he called WarnerMedia. .

However, in the press release announcing the move, the FTC focused on Microsoft’s track record with game developer Bethesda, which it acquired for $7.5 billion in 2021. star field When red fall “Microsoft is exclusive, despite assuring European antitrust authorities that it has no incentive to withhold games from rival consoles,” the FTC said.

This is not just the FTC’s battle with Big Tech. The agency inherited the Trump administration’s antitrust lawsuit against Meta, and then sparked a new battle with the same company last July by trying to block Meta’s acquisition of a virtual reality game developer. However, while Khan is best known for his criticism of Amazon, the FTC took no action on Amazon’s $8.5 billion merger with MGM.

Given the agency’s limited resources, Khan must choose his own battles. Microsoft and his $69 billion merger are the biggest battle ever.

Peter Kafka contributed the report for this article.