Daily Archives: December 9, 2022

The Federal Trade Commission Sues to Block Microsoft’s Acquisition of Activision Blizzard

It has been nearly 11 months since Microsoft’s bombshell announcement about signing a deal to acquire Activision Blizzard for almost $69 billion dollars.

XBox plus Activision Blizzard equals something

Since then there has been rumblings that somebody in the US or EU might challenge the merger and… the rumblings turned out to be true as the US Federal Trade Commission announced their intent to sue to block the merger.

Among the FTC’s mandates is to oversee such mergers to assure that they do not lead to monopolistic anti-competitive situations or unduly harm consumers, something that they have been spectacularly bad/naive about my entire life.  See the T-Mobile acquisition of Sprint where literally every promise made by T-Mobile to keep the deal from being blocked by the FTC was broken.

It seems unlikely that Microsoft and Activision aren’t lying hard enough.  They have been out promising that the swath of games they will soon control will be allowed on platforms like PlayStation or Steam.  But the FTC isn’t buying Microsoft’s reassurances… like maybe there is a history of anti-competitive practices there… and stated in their press release:

With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.

If we have learned anything over the years, it is that a corporation’s promises are worthless without contractual weight behind them… and Microsoft was clearly already aware of the FTC’s interest, announcing a deal to keep Call of Duty on the Switch just this week in an attempt to build a case for itself.

And yes, I am swinging hard against Microsoft so far in this post, but I am conflicted on the whole deal.

Microsoft is, by all reports, a much better place to work that Activision Blizzard and it might be good to have a major studio like ActiBlizz, which has been facing so many problems with the state of California, cleaned up, something that will never happen with the current ActiBlizz management in place.  Literally every c-level exec needs to be cast out before there to be any change, and there are probably a good number of VPs and directors that should be on the list as well.

Of course, part of my conflict is that the one person who drives the culture at ActiBlizz, Bobby Kotick, is also the person who will benefit the most from this merger.  If the merger goes through all his sins will be rewarded with dump trucks full of cash… but if the merger does not go through, then he’ll just remain obscenely over-compensated while beating down unions that are only being proposed because of poor working conditions and compensation.

As such, Kotick is keen to reassure people that the deal is going through.

I wanted to provide a brief update on our pending merger with Microsoft. This week the U.S. Federal Trade Commission (FTC) announced its decision to challenge the deal. This means they will file a lawsuit to block the merger, and arguments will be heard by a judge.

This sounds alarming, so I want to reinforce my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge.

As I may have suggested, facts are few and far between.  It is the potential for how the company could use the weight of its combined influence of XBox Live for PC and Console plus the titles like Call of Duty that they will control if this deal goes through.

So will the deal go through?

As much as I hate to agree with anything Bobby says, I strongly suspect the acquisition will be allowed.  In fact, I doubt the FTC has in mind any plan to actually stop the deal cold.  Instead, they will probably want some of the promises Microsoft is making to be legally mandated by an enforceable agreement, like not screwing over competing platforms by making all their titles exclusive to Microsoft channels, in order to acquiesce on the deal.

So that is my guess.  But we shall see.  A bit of a shake up in the status quo at least.  Something to distract us from whatever Elon Musk has been up to today.