The possibility of the major American regulator filing a lawsuit to stop the agreement between Microsoft and Activision was allegedly raised by four unidentified sources within the FTC, according to a story that was reported vaguely some time back. In fact, Microsoft is attempting to pay $69 billion to bring the creators of Warcraft, Candy Crush, and Call of Duty under its control in order to support Xbox Game Pass in the struggle against Apple and Google’s mobile gaming monopoly. Despite Microsoft’s assurance that Call of Duty would continue on PlayStation “as long as a PlayStation exists,” Sony, through its PlayStation division, has come out forcefully against the deal.
According to some observers, such as market analyst Michael Pachter, the FTC’s argument against the purchase is an effort to obtain written concessions from Microsoft without having to litigate the agreement, which Pachter anticipates would go poorly for the FTC. In fact, there isn’t much precedent for a blocker on this kind of agreement, and when you correctly analyse the game sector, it ranks among the more competitive and vibrant industries out there, with the exception of Google and Apple’s tight control over mobile app stores (an actual monopoly that the FTC should investigate).
However, Activision’s CCO just updated the public via a tweet that the company is prepared to defend the merger in court, if required. Microsoft and Activision are collaborating with regulators to address their concerns. Regulators are correct to look into and carefully review the transaction. Regulators of the past failed to adequately assess how, for instance, Meta’s acquisition of Instagram and WhatsApp may restrict consumer choice and innovation while also enabling Google and Apple to maintain a blanket monopoly on the distribution of software across nearly all mobile devices in the world.
Windows, in contrast, is entirely open and features a wide variety of rival stores and companies. In its comments to regulators, Microsoft has repeatedly brought up the Apple-Google mobile duopoly, mentioning its aspirations to someday create a rival Xbox app store for mobile, which it may be hoping regulators will eventually force Apple and Google to accept onto their platforms.
It is reasonable to believe that we will continue to hear about the merger for the foreseeable future as the EU, UK CMA, and U.S. FTC continue to evaluate it. Microsoft had expressed the desire to complete the transaction by the summer of 2023.
