The FTC has filed a legal challenge to try and block Microsoft’s plan to buy Activision Blizzard for $68.7 billion, according to a press release from the regulator. The lawsuit was filed today after weeks of back and forth between Microsoft, Sony, and regulators over competition concerns and the future of Call of Duty. The FTC argues that the acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” You can read the FTC’s redacted complaint here or embedded at the bottom of this article.
The vote from the FTC commissioners today means Microsoft now faces significant hurdles to getting its Activision Blizzard deal complete. Regulators in the UK and EU are also scrutinizing the deal closely, despite Microsoft’s repeated attempts to appease regulators.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s vice chair and president, said in a statement to The Verge. “We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
The company’s corporate vice president of communications, Frank X. Shaw, also tweeted a link to a document titled: “Get The Facts: How Microsoft is Committed to Growing Gaming Communities.”
In a letter to Activision Blizzard employees, CEO Bobby Kotick told staff that he wants to “reinforce my confidence” that the acquisition will close. “The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge,” he said. The company also posted an internal email penned by Jeb Boatman, Activision’s SVP of litigation, regulatory, and public policy law, outlining its position on the deal.
Microsoft offered Sony a 10-year deal on new Call of Duty games last month, but Sony hasn’t yet accepted the offer. A similar deal was agreed upon between Nintendo and Valve, though. It could see Call of Duty heading to Nintendo consoles if the Activision Blizzard deal is approved.
Microsoft’s frustrations over Sony’s objections to its Activision Blizzard deal have been clear. “Sony has emerged as the loudest objector,” said Microsoft president Brad Smith in a Wall Street Journal op-ed recently. “It’s as excited about this deal as Blockbuster was about the rise of Netflix.” Microsoft also described the UK’s Competition and Markets Authority (CMA) concerns as “misplaced” and accused the regulator of adopting “Sony’s complaints without considering the potential harm to consumers.”
Microsoft has also accused Sony of paying developers to keep their content off of its Xbox Game Pass service, and Sony has even argued that Microsoft’s Activision Blizzard acquisition could “hurt developers and lead to price rises.”
Update December 8th, 5:34PM ET: Added FTC complaint.