Wedbush managing director Dan Ives discusses the FTC’s decision to block Microsoft’s purchase of Activision on Varney & Co.
Microsoft Corp acquired $68.7 billion Activision Blizzard, the maker of “Call of Duty,” hit another snag Tuesday, when a group of gamers challenged the deal in court, claiming that the purchase would unlawfully eliminate competition in the video game industry.
The federal antitrust lawsuit, filed in San Francisco, comes less than two weeks after a lawsuit was filed by the Federal Trade Commission to block a merger between Activision Blizzard, one of the world’s largest video game publishers, and Microsoft, the maker of the Xbox console.
The Microsoft logo is seen on a smartphone placed over the Activision Blizzard logo shown in this illustration taken on January 18, 2022. (Reuters / Dado Rovic / Illustration / Reuters)
The private lawsuit was filed on behalf of 10 video game players in californiaNew Mexico and New Jersey.
Similar to the FTC case, players seek a court order preventing the companies from completing the merger, canceling the break-up fee, and paying legal costs.
The players’ lawsuit alleges that the merger violates the Clayton Antitrust Act by limiting competition in the gaming sector and by harming the public.
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Their complaint cites concerns that the union would give Microsoft power at multiple levels of the games industry to “lock in competitors, limit production, reduce consumer choice, raise prices, and further inhibit competition”.
Activision’s “Call of Duty” games are pictured at a store in the Manhattan borough of New York City, New York, US January 18, 2022. (Reuters/Carlo Allegri/file photo/Reuters Photo)
“Microsoft has already shown that it can and will block content from its gaming competitors,” Holly Vidova, Director of the Office of Competition at the Federal Trade Commission wrote in a press release. “Today we seek to prevent Microsoft from taking control of a leading independent game studio and using it to harm competition in dynamic and fast-growing game markets.”
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A Microsoft representative on Tuesday defended the deal, saying in a statement that it “will expand competition and create more opportunities for gamers and game developers.”
After the FTC lawsuitMicrosoft President Brad Smith said, “We have complete confidence in our case and welcome the opportunity to present our case in court.”
A Call of Duty character hangs on a wall in a stairwell on Friday, October 21, 2022, at Activision Blizzard’s Infinity Ward Division, in Woodland Hills, California. (AP Photo/Allison Dinner/AP Images)
In a statement, plaintiffs’ San Francisco attorney Joseph Savery said, “As the video game industry continues to grow and develop, it is critical that we protect the market from monopolistic mergers that will harm consumers in the long term.”
Special prosecutors Antitrust lawsuits can be pursued in US courteven while a related US agency case is pending.
The acquisition, announced in January, faces antitrust scrutiny in the European Union.
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Reuters contributed to this report.
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