Microsoft’s $69 billion acquisition of Activision Blizzard has sent shockwaves through the technology sector. The gaming industry could see significant changes due to this merger, opening up new possibilities for both parties involved. Federal antitrust regulators had sought to halt the deal, but a judge has ruled in Microsoft’s favor by not doing so. Let’s look closer at this significant change and what it means for the gaming market.
Judge Jacqueline Scott Corley of the United States District Court sided with Microsoft, finding that the Federal Trade Commission (FTC) had failed to prove that it was likely to win at trial. The Federal Trade Commission, which is responsible for enforcing antitrust laws, didn’t raise any major concerns about how the merger would affect competition in the console, library subscription services, or cloud gaming markets.
The decision by Judge Corley is a big win for Microsoft because it clears the way for the company to merge with Activision Blizzard. Both Activision Blizzard CEO Bobby Kotick and Microsoft CEO Satya Nadella testified during the five-day trial, with Kotick promising to keep Call of Duty playable on competing platforms like Sony’s PlayStation.
After the decision, Bobby Kotick discussed the merger’s potential benefits for customers and employees. He claimed the merger would increase competition and shield the expanding gaming market from the monopolization of existing companies. Microsoft agreed, saying that in the long run, everyone would win from the merger.
As a litmus test for the FTC’s newfound interest in the tech sector, this case has received a lot of attention. Lina Khan, the chair, is at the helm and is well-known for taking a hard line against the monopolistic practices of tech companies. The FTC’s attempt to halt Meta’s acquisition of VR fitness startup Within Unlimited was also rejected by a judge earlier this year.
Biden’s nominee for the bench, Judge Corley, seemed skeptical of the FTC’s arguments. Possible negative consequences, such as Microsoft pulling Call of Duty from competing platforms or providing a subpar gaming experience on competing consoles, were called into question.
Even though Microsoft won the case, antitrust advocates have criticized the decision. In light of Judge Corley’s disclosure that her son works at Microsoft, the American Economic Liberties Project has urged the FTC to file an appeal. The organization claims that internal Microsoft emails reveal a plot to limit rival firms’ ability to compete in the video game industry.
Senior counsel at the American Economic Liberties Project, Katherine Van Dyck, voiced concern over Microsoft’s acquisition of a significant U.S. video game developer. She brought attention to the risk that Microsoft will prioritize its own platforms to the detriment of other platforms and cloud gaming services.
Judge Corley stated during the hearing that the FTC had already won for consumers due to Microsoft’s promises to its competitors. Microsoft promised to keep Call of Duty playable on the Switch console, Nvidia’s cloud gaming service, and other platforms for at least ten years in an effort to allay antitrust concerns.
Many in the gaming industry viewed Microsoft’s commitments as a step in the right direction, despite the FTC’s claims that the agreements were hastily made and did not go far enough to protect the market.
While the EU and many other nations have given their blessing to the merger, the Competition and Markets Authority (CMA) in the United Kingdom has voiced its opposition. Microsoft has filed an appeal with the tribunal to overturn the CMA’s decision to block the deal, and the hearing is expected to occur later this month.
Canadian authorities have also opened an inquiry into the merger. They worry that the deal will stifle innovation and raise prices for video game consoles, subscription services, and cloud gaming. The merger may be affected further by the results of the Canadian investigation.
There will be lasting effects on the gaming industry as a result of the Microsoft-Activision merger. Microsoft’s acquisition of a major game developer gives it considerable influence over the industry as a whole, and could lead to a bias in favor of Microsoft’s own platforms. This raises questions about the health of competition and the standard of alternative platforms’ game offerings.
As the merger progresses, it will be essential to keep an eye on Microsoft’s commitments to preserve competition and guarantee a level playing field for all gaming platforms. The gaming industry as a whole will be watching to see how this potentially game-changing deal plays out.
First reported on CNN
Frequently Asked Questions
Q: Why did the judge rule in favor of Microsoft in the antitrust case?
A: Judge Jacqueline Scott Corley ruled in favor of Microsoft because the Federal Trade Commission (FTC) failed to prove that it was likely to win at trial. The judge did not see major concerns about the merger’s impact on competition in the gaming market, such as console, library subscription services, or cloud gaming markets.
Q: What promises did Microsoft make to address antitrust concerns?
A: To address antitrust concerns, Microsoft promised to keep games like Call of Duty playable on competing platforms and cloud gaming services for at least ten years. These commitments were viewed positively by many in the gaming industry, although critics argue that they may not go far enough to protect competition.
Q: What are the concerns raised by antitrust advocates?
A: Antitrust advocates have criticized the decision, questioning Judge Corley’s impartiality due to her son’s employment at Microsoft. Organizations like the American Economic Liberties Project have urged the FTC to file an appeal, claiming that internal Microsoft emails reveal a plot to limit competition in the video game industry.
Q: How have international regulators responded to the merger?
A: The EU and several other nations have approved the merger. However, the UK’s Competition and Markets Authority (CMA) has opposed it. Microsoft has filed an appeal with the tribunal to overturn the CMA’s decision, and a hearing is expected to occur later this month. Canadian authorities have also opened an inquiry into the merger.
Q: What are the merger’s potential effects on the gaming industry?
A: The Microsoft-Activision merger could lead to a bias in favor of Microsoft’s own platforms, raising concerns about competition and the offerings of alternative gaming platforms. It will be essential to monitor Microsoft’s commitments to preserving competition and a level playing field as the merger progresses. The gaming industry is watching closely to see how this deal unfolds.
Featured image credit: Ian Hutchinson; Unsplash; Thank you!
