US FTC Blocks $90 Trillion MS-Activision Acquisition...Opposition Lawsuit

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. Federal Trade Commission (FTC) has filed an antitrust lawsuit opposing Microsoft's (MS) acquisition of Activision Blizzard. The authorities believe that if the $68.7 billion (approximately 90 trillion KRW) mega merger and acquisition (M&A) is completed, MS's control over popular content will hinder competition in the gaming market.

According to the Wall Street Journal (WSJ), CNBC, and others, the FTC voted 3 to 1 on the 8th (local time) to approve the lawsuit. Holly Vedova, Director of the FTC's Bureau of Competition, stated in a press release, "By controlling Activision's content, MS could hinder competition regarding product quality, price, and innovation," adding, "This loss of competition is likely to cause significant harm to many consumers," explaining the background of the lawsuit.

The FTC also pointed out that MS had a history of blocking and pressuring competitors from supplying games when it acquired ZeniMax Media in 2021. Director Vedova criticized, "MS has already shown that they will not provide game content to their competitors." Activision Blizzard is a company formed in 2008 by the merger of Blizzard, which released StarCraft and Diablo, and Activision, which released Call of Duty, securing a substantial number of users worldwide.

MS's acquisition of Activision, announced last January, was expected to be the largest acquisition in MS's history. Upon acquisition, MS will rank among the global top three alongside China's Tencent and Japan's Sony. Accordingly, voices expressing concerns about MS's market monopoly have been rising not only among competition authorities worldwide but also within the gaming industry. The UK's Competition and Markets Authority (CMA) and the European Union (EU) Commission have already begun in-depth investigations ahead of schedule.

With the FTC in the U.S. also deciding on an antitrust lawsuit, it is evaluated that a strong brake has been applied to MS's acquisition of Activision. Recently, executives including President Brad Smith reportedly visited Washington directly to launch an all-out persuasion campaign for the merger and acquisition amid growing concerns over the FTC's antitrust lawsuit. The day before, as part of persuading competitors, they also announced plans to provide Activision Blizzard's global franchise 'Call of Duty' to Sony and Nintendo.

WSJ stated, "This is not the first time MS has faced such pressure," adding, "In 1998, the U.S. Department of Justice filed a broad antitrust lawsuit against MS, forcing the company to change its practices related to the Windows operating system business." Local media have noted that since Lina Khan, the FTC Chair known as the 'Amazon Reaper,' took office, such a sequence was expected, and they foresee that not only MS but also future big tech companies will find it difficult to pursue large-scale M&As.

President Smith emphasized in a statement that day, "We still believe this acquisition will expand competition among gamers and game developers and create more opportunities." He also mentioned, "We welcome the opportunity to litigate in court." Originally, MS planned to complete the deal by June 2023.