US FTC Blocks $90 Trillion MS-Blizzard Acquisition... Opposition Lawsuit (Summary)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. Federal Trade Commission (FTC), led by Lina Khan, known as the 'Amazon Reaper,' has blocked Microsoft’s (MS) $68.7 billion (approximately 90 trillion KRW) acquisition deal. The 'deal of the century,' announced earlier this year, is now at risk of collapse. Under Khan’s leadership, antitrust pressure has intensified, leading to widespread expectations that future big tech M&A attempts will face significant challenges.

On the 8th (local time), the FTC announced it had filed an antitrust lawsuit opposing MS’s acquisition of Activision Blizzard. Among the four commissioners reviewing the case, three voted in favor of the lawsuit. Holly Vedova, Director of the FTC’s Bureau of Competition, stated in a press release, "By controlling Activision Blizzard’s content, MS could hinder competition in product quality, pricing, and innovation," adding, "This loss of competition would cause significant harm to many consumers."

Notably, the FTC pointed out MS’s past behavior when it acquired ZeniMax Media in 2021, where MS blocked and pressured competitors from accessing games. The FTC warned that MS could similarly dominate the market by leveraging strong intellectual property rights this time. Vedova criticized, "MS has already demonstrated that they will not provide game content to their competitors." Activision Blizzard is the developer of popular games such as 'Call of Duty' and 'World of Warcraft,' with over 400 million users worldwide.

MS’s acquisition of Activision, announced in January, has been recognized as the largest M&A deal in the IT industry and beyond. If completed, MS would rank among the global top three by revenue, alongside China’s Tencent and Japan’s Sony.

Consequently, competition authorities worldwide, as well as voices within the gaming industry, have expressed concerns about MS’s market monopoly. The UK’s Competition and Markets Authority (CMA) even demanded remedial measures last September. With the FTC’s antitrust lawsuit in the U.S., MS’s home turf, the acquisition faces even stronger obstacles.

Recently, MS executives, including President Brad Smith, reportedly visited Washington to launch an all-out persuasion campaign amid growing FTC antitrust concerns. The day before, as part of efforts to convince competitors, MS announced plans to provide Activision Blizzard’s global franchise ‘Call of Duty’ to Sony and Nintendo.

Locally, the lawsuit is seen as a predictable outcome under Khan’s FTC leadership. Khan has been a strong critic of big tech companies expanding their size through large-scale M&A. Earlier, the FTC also blocked Meta, Facebook’s parent company, from acquiring a virtual reality startup in July. Major foreign media outlets have reported that "large-scale M&A attempts by big tech, including MS, are becoming increasingly difficult."

On the other hand, MS maintains it will not abandon the acquisition. President Smith emphasized in a statement, "We still believe this acquisition will expand competition among gamers and game developers and create more opportunities." He added, "We welcome the chance to explain our case in court." MS originally planned to complete the deal by June 2023.