The American competition policeman chose the day of the Oscars of video games to put a stop to the acquisition of Activision by Microsoft

Posted Dec 9 2022 at 15:25Updated 9 Dec. 2022 at 15:45

Bobby still believes in it. In an e-letter addressed to his teams, which he signs with this affectionate hypocorism, Robert Kotick, the boss of Activision Blizzard, says his “confidence that this agreement will be concluded”. He still thinks that the takeover of the video game publisher by Microsoft will come to an end despite the opposition of the Federal Trade Commission (FTC), the American competition authority, which sees in this operation a scheme by the manufacturer of the Xbox to monopolize the exclusivity of the games of one of the “big four” of the world edition, known for “Warcraft” or “Call of Duty” on consoles and PC or for “Candy Crush” on smartphones and tablets .

The FTC, which fears that Microsoft will get “control over leading franchises”which “would harm competition”, announced yesterday – the day of the “Game Awards”, the Oscars of video games – that it was taking legal action against the Tech giant to block its proposed acquisition. from Activision Blizzard.

“Starfield”, exclusively available on Xbox

The announcement of this giant takeover bid of 70 billion dollars, also in the crosshairs of the European (EU) and British regulatory authorities, was one of the highlights of the start of the year. 2022 is coming to an end and Microsoft has still not swallowed Activision Blizzard whereas, in 2021, it only needed six months to finalize the acquisition of the Bethesda studio (“The Elder Scrolls”, “Fallout”, “Doom”), until then the largest acquisition of the giant in the field of video games (8 billion dollars). And it is precisely this operation that gives cartridges to the FTC to oppose the takeover of Activision, under a Biden administration which, moreover, has made fight against anti-competitive practices a priority of his mandate. The pressure is strong on the Gafam. The FTC commission, chaired by five commissioners, is now made up of three Democrats and one Republican after another resigned in October. The three-to-one vote in favor of legal action is therefore not a big surprise.

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“Microsoft has already shown that it can and wants to deprive its gaming rivals of content”, argues Holly Vedova, director of the FTC’s competition bureau, in a press release. Fans of “The Elder Scrolls” have made enough noise in recent months on social media to complain that the sixth installment of the hit franchise will only be available on Xbox and Xbox Game Pass, and not on PS5 or on pc. Already, Bethesda’s “Starfield” and “Redfall” games, scheduled for release next year, have been made exclusive to Microsoft platforms after the group had assured antitrust authorities that it would be otherwise. Also, the promise made Wednesday to make “Call of Duty” available on Nintendo consoles for ten years did not convince the FTC.

Today, the policeman of American competition “seeks to prevent Microsoft from gaining control of a leading independent studio and using it to harm competition in multiple growing gaming markets. » The evolution of the video game sector towards streaming is attracting new suitors, who historically do not belong to this profession – such as Amazon, a must in e-commerce, the cloud and entertainment (Prime Video) – but who are baited by the potential gains to be made from a market of 200 billion dollars a year.

“A somewhat significant setback for Microsoft”

If Microsoft were finally allowed to buy Activision, which would then become the biggest takeover in its history, it would control about 11% of the global publishing market, according to Bloomberg Intelligence estimates. Microsoft would become, in total, the world’s No. 3 in the video game industry in terms of turnover, behind Chinese Tencent and Japanese Sony, maker of the PlayStation. Sony gained more than 2% today on the Tokyo Stock Exchange.

For Activision Blizzard CEO Robert “Bobby” Kotick, “the allegation that this agreement is anti-competitive does not correspond to the facts”he wrote to his teams. “We believe we will win this challenge. » The Stock Exchange, for its part, has not completely given up hope. Yesterday, after the FTC announcement, Microsoft shares closed up about 1% while Activision shares ended down 1.5%. The latter are trading at nearly 75 dollars, below the offer price of 95 dollars, but still above the price level observed during the two months preceding Microsoft’s offer.

The FTC said it was filing the lawsuit in its administrative court, internally, rather than taking the case to federal court for an emergency injunction to stop the merger in its tracks. An agreement can still be found, but the case is likely to drag on. The judge must hear the evidence, but he will not do so until August 2023, which is after the date of closing of the redemption set for June.

Microsoft Chairman Brad Smith said yesterday that his company is likely to challenge the FTC’s lawsuit. “If Microsoft files a lawsuit and loses, the group could be limited in its ability to make big deals in the future”, worries Brad Reback, analyst for the investment bank Stifel. This story is “a somewhat significant setback for Microsoft” And a first big victory for the Biden administration? In any case, Democratic Senator Elizabeth Warren rejoiced yesterday on Twitter at the FTC’s decision to sue Microsoft. “Corporate monopolies have had free rein to raise prices and hurt workers, but now the Biden administration is committed to promoting competition. » Lately, Democrats have been pressuring the FTC to take a closer look at Amazon’s takeover of iRobot.

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The American competition policeman chose the day of the Oscars of video games to put a stop to the acquisition of Activision by Microsoft