June 13 (UPI) — The U.S. Federal Trade Commission is suing to prevent Microsoft from acquiring video game developer Activision Blizzard in a nearly $70 billion deal that the regulator says will reduce competition of product quality, price and innovation.
The lawsuit — which was filed Monday in the U.S. District Court for the Northern District of California — asked the federal court to either enter a temporary restraining order or grant a preliminary injunction against the merger as the regulator states “Microsoft and Activision have represented that they may consummate the proposed acquisition at any time … without any further notice to the commission.”
The regulator filed the lawsuit months after it asked an in-house court in December to prohibit the merger of the two companies on antitrust grounds, arguing that the union will affect the video game industry and potentially create a monopoly in multiple markets due to Microsoft’s control over Activision titles at the disadvantage of competitors, such as Nintendo, the maker of the Nintendo Switch; and Sony, the maker of the Sony PlayStation.
Microsoft is the maker of video game console Xbox, while Activision is the developer of smash games series Call of Duty, Overwatch, StarCraft, Warcraft and others. If the merger is consummated, it will be the largest not only in video game history but in Microsoft’s history, which has seen more than 10 other third-game party studios and their titles be acquired by the behemoth U.S. software company in recent years.
“Microsoft’s ownership of Activision would provide Microsoft with the ability to withhold or degrade Activision content through various means, including manipulating Activision’s pricing, degrading game quality or player experience on rival offerings, changing the terms and timing of access to Activision’s content or withholding content from competitors entirely,” the FTC argued in its Monday lawsuit.
The FTC is asking the court to temporarily prohibit the merger before 9 p.m. PT Thursday as its in-house court considers the case and the two companies have signaled their deal may be consummated any time after that.
Activision Blizzard CEO Bobby Kotick told employees that their lawyers have been preparing for a year and are ready to present their case before a federal judge.
“The facts are on our side, and we will continue to keep you updated throughout the process,” Kotick said. “As I’ve said before, we’re in a strong position because of your dedication and hard work.”
Microsoft Vice Chair and President Brad Smith tweeted a similar tone of confidence, saying the filing should “accelerate the decision-making process” in this protracted merger.
“This benefits everyone,” he said. “We always prefer constructive and amicable paths with governments but have confidence in our case and look forward to presenting it.”
The filing comes as several countries, including South Korea two weeks ago and the 27-member European Union last month, have approved the merger, but Britain has stood in the way.
London’s Competition and Markets Authority in late April moved to block the deal by citing Microsoft’s existing dominance in the cloud sector.
Microsoft lashed out, saying that this proves that Europe is better for business than Britain.
