The Federal Trade Commission filed a lawsuit to stop Microsoft from acquiring the developer of Call of Duty, the most significant attempt yet by the Lina Khan-led agency to hold up tech mergers.
The lawsuit was filed on Wednesday to block Microsoft’s acquisition of Activision-Blizzard for $68.7 billion. The two companies agreed to the purchase in January, one of the largest acquisitions in tech and gaming history. The commissioners voted 3-1 to issue the complaint, with Christine Wilson, a Trump appointee, voting no.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition, in a press 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.”
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The lawsuit warns that the deal would give Microsoft the edge in the console gaming market and an unfair advantage through its subscription gaming model.
Activision-Blizzard, best known for games such as Call of Duty, World of Warcraft, and Overwatch, has produced several highly successful games in the esports industry. However, the company has been reeling due to a lawsuit filed by the California Department of Fair Employment and Housing alleging a “pervasive frat boy workplace culture.”
The FTC is not the only one to investigate Microsoft over the deal. The European Union also announced it was investigating the merger for monopolies.
The company attempted to dismiss antitrust concerns by announcing 10-year contracts with Sony and Nintendo to ensure that all Call of Duty games would appear on their platforms as before if the merger agreement closes.
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Microsoft President Brad Smith said in a press statement.
“The allegation that this deal is anti-competitive doesn’t align with the facts,” argued Activision-Blizzard CEO Bobby Kotick. “And we believe we’ll win this challenge.”
Microsoft has “complete confidence in our case,” Smith added, “and welcome the opportunity to present our case in court.”
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The FTC has gotten aggressive since President Joe Biden’s appointment of Khan. The agency took its first Big Tech-related case on July 27 by attempting to block Meta’s acquisition of the virtual reality developer Within. Khan decided to block the merger despite its staff recommending against it, causing tension within the agency.
