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The U.S. FTC may file a lawsuit to block Microsoft’s $69 billion acquisition of Activision Blizzard

The U.S. Federal Trade Commission (FTC) may file an antitrust lawsuit to block Microsoft Corp. from acquiring video game publisher Activision Blizzard Inc. for $69 billion, Politico reported, citing three people familiar with the matter.

Whether the FTC will initiate the lawsuit has not been determined, and the four FTC commissioners have not voted to file a complaint or meet with lawyers for the companies, two of the people said. However, the FTC staff reviewing the deal is skeptical of the companies’ arguments, the people said.

The investigation is still ongoing, but much of the heavy lifting has been done, including depositions of Microsoft CEO Satya Nadella and Activision chief Bobby Kotick, the people familiar with the matter said. If the agency does proceed with its investigation, it could do so as soon as next month, the people said.

The central issue of concern for the FTC is whether the Activision acquisition would give Microsoft an unfair boost in the video game market. Microsoft’s Xbox ranks third in front of industry leader Sony Interactive Entertainment and its PlayStation game consoles. However, Sony has emerged as a leading opponent of the deal, telling the Federal Trade Commission and other state regulators that it would be at a distinct disadvantage if Microsoft allowed popular games such as “Call of Duty” to be exclusive on its platform.

The Federal Trade Commission declined to comment.

In a statement outlining Sony’s position submitted to the U.K.’s Competition and Markets Authority in October, which was released on Wednesday, Sony said the deal would not only hurt its ability to compete, but would also leave consumers with fewer choices in games and developers with fewer options for releasing them. Sony said, “Microsoft is a ‘tech titan,’ buying irreplaceable content at an undisputed price ($68.7 billion) and pushing a competitive advantage on itself.”

In its own statement released Wednesday by the U.K. regulator, Microsoft accused Sony of making self-defeating statements to maintain its No. 1 position in the gaming space, “The notion that Sony, the incumbent market leader with clear and enduring market power, could be defeated by Xbox, the weakest of the three console competitors, because it lost a game is not credible. “

Microsoft said it has repeatedly promised to keep “Call of Duty” on Sony’s PlayStation and, furthermore, that the game is not a must-have as Sony says. In addition, Microsoft noted that the game is not currently available on any subscription service and that adding it to the Xbox service in the future would not hurt Sony.

To a lesser extent, Google is also an opponent of the deal, according to two people familiar with the matter. The company believes that Google’s Chrome operating system deliberately degrades the quality of its Game Pass subscription service, and that owning Activision would further spur it to do so, ultimately steering hardware sales to Microsoft and away from Google, the people said.

Google is a small player in the gaming industry and is phasing out its own online gaming service, Stadia. however, it has come under antitrust scrutiny around the world, including for its behavior in the gaming market.

A spokeswoman for Google declined to comment.

Microsoft has pledged to continue offering Call of Duty on Sony’s Playstation console and recently made an offer to let Sony use the game for the next 10 years, and it is not yet known how Sony will respond to that offer.

However, according to two people with knowledge of the review, the FTC’s concerns go beyond Call of Duty, and investigators are trying to determine how Microsoft could use future unannounced games to boost its gaming business.

“Any suggestion that the deal could lead to anticompetitive effects is completely absurd.” Activision spokesman Joe Christianault said, “This merger will benefit gamers and the U.S. gaming industry, especially as we face increasing competition from abroad. We are committed to continuing to work with regulators around the world to allow the transaction to proceed, but we will not hesitate to fight to defend this transaction.”

Activision also disputed Epic’s allegations. “Epic’s allegations are nonsense,” Christinat said, “and we can confirm that Google has never asked us, pressured us, or made us agree not to compete with Google Play – we have submitted documents and testimony proving this.”

Microsoft spokesman David Cady said the company “is prepared to address the concerns of regulators, including the Federal Trade Commission, and Sony to ensure that the transaction closes with confidence. After the deal closes, we will still be behind Sony and Tencent in the marketplace, and Activision and Xbox together will benefit gamers and developers and make the industry more competitive.”

Technically, the Federal Trade Commission does not need to take any action at this time. European and U.K. regulators have also recently conducted in-depth investigations, meaning the companies won’t be able to close the deal until spring at the earliest. That means that if the FTC does sue, it will likely do so in its own internal administrative tribunals.

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Threza Gabriel
Threza Gabrielhttps://www.techgoing.com
TechGoing is a global tech media to brings you the latest technology stories, including smartphones, electric vehicles, smart home devices, gaming, wearable gadgets, and all tech trending.
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