Is Microsoft's largest acquisition in history about to die? FTC sues to block Activision Blizzard acquisition

　　The Paper reporter Wu Yuli

　　Tech giant Microsoft's $68.7 billion acquisition of Activision Blizzard has been blocked.

　　On December 8, local time, the "Wall Street Journal" reported that the U.S. Federal Trade Commission (FTC) sued Microsoft on Thursday to stop its $75 billion acquisition of Activision Blizzard (after adjusting for Blizzard's net cash). , the deal was valued at $68.7 billion), and said the deal could jeopardize competition in the gaming market.

　　According to Bloomberg, the acquisition is Microsoft's largest ever and one of the 30 largest acquisitions ever.

Microsoft and Activision Blizzard first announced the deal in January and expect to close the deal in June next year.

According to the "Wall Street Journal", this is one of the most significant actions of the FTC during the Biden administration to try to prevent the merger of technology giants.

　　Activision Blizzard owns many world-renowned IPs. Games such as "World of Warcraft", "Call of Duty", "StarCraft" and "Diablo" have attracted hundreds of millions of monthly active players worldwide.

　　Microsoft, on the other hand, produces hardware—the Xbox console game console, and forms a tripartite rivalry with Sony’s PlayStation game console and Nintendo Switch game console in the console game console market. At the same time, these three companies are also developing and selling their own game software.

In addition, the cloud gaming market is also in its infancy. Microsoft is one of the largest cloud computing service providers in the world, and its Game Pass subscription service has always been the leader in the cloud gaming market.

　　After the deal, Microsoft will control about 11 percent of the world's digital game publishing business, according to Bloomberg Intelligence analysts.

FTC says the transaction is illegal, Microsoft: Confident in completing the transaction

　　The deal was found to be illegal by the FTC, because if the deal goes through, Microsoft will be able to directly influence the users of its Xbox game console competitor, "By controlling Activision Blizzard's game licensing, Microsoft will be able to manipulate Activision's pricing. , to the detriment of consumers by reducing the quality of Activision’s games or player experience on competitors’ consoles and gaming services, changing the terms and timing of Activision content, or not providing content to competitors at all.”

　　Holly Vedova, director of the FTC's Bureau of Competition, said: "Microsoft has demonstrated its ability and will not share relevant game content with competitors in the game industry. We are preventing Microsoft from gaining control of a leading independent game studio in the industry and preventing This is how Microsoft disrupts competition in this ever-changing and rapidly growing gaming market."

　　In the indictment, the FTC stated that Microsoft had previously acquired and used valuable game content to outperform rivals in the game console market.

After acquiring ZeniMaxMedia Inc., the parent company of well-known game developer Bethesda Softworks, in 2021, Microsoft has turned several Bethesda games into its own exclusive products.

　　Microsoft, for its part, said it would go to court with federal agencies and said it believed the deal would benefit competition.

　　Regarding the FTC's allegations, Microsoft President Brad Smith responded, "We still believe that this transaction will expand competition and create more opportunities for gamers and game developers." Concessions were made to the FTC earlier this week.

　　Activision Blizzard CEO Bobby Kotick also said he was confident the deal would be done.

"The allegations that this transaction is anti-competitive are untrue and we believe we will win this challenge. The completed company will be beneficial to market participants," he said.

If Microsoft loses the lawsuit, it will affect its ability to deal in the future

　　In fact, in addition to the FTC, Microsoft's acquisition of Activision Blizzard has also aroused concerns from other regulators.

According to the New York Times, the deal has been reviewed by 16 regulators around the world.

The Wall Street Journal mentioned that the FTC's lawsuit did not require an emergency order from a federal court to block the transaction because the acquisition was still under review by European competition authorities and could not have been completed.

　　In addition, competitor Sony has also been an opponent of Microsoft's deal. Although Microsoft has repeatedly stated its commitment, Sony still believes that Microsoft may prevent companies such as Sony from accessing Activision Blizzard's games, especially "Call of Duty".

　　Jennifer Rie, senior litigation analyst at Bloomberg Intelligence, said the FTC would have a hard time winning the case because enforcers would have to prove that it would be profitable for Microsoft to restrict rivals' use of Call of Duty or similar games, which Microsoft has already done. Pledge to allow rivals to keep access to the best-selling game.

　　Joost van Dreunen, a video game expert who teaches at New York University's Stern School of Business, said antitrust agencies have become skeptical about the promises made by companies, especially technology platforms.

　　Brad Reback, an analyst at Stifel Nicolaus, believes that this is an important setback for Microsoft. "For the past two decades, they have worked very hard to stand on the side of government agencies," Reback added. Losing the case could limit Microsoft's ability to make big deals in the future.

　　As of the close of U.S. stocks on the 8th, Activision Blizzard’s stock price fell 1.54% to $74.76 per share; Microsoft’s stock price rose 1.24% to $247.4 per share.