Microsoft’s gaming ambitions have sunk as the US seeks to block a deal with Activision

Washington-

The Biden administration on Thursday decided to block Microsoft’s $69 billion bid to buy ‘Call of Duty’ maker Activision Blizzard, putting a stumbling block in the tech giant’s plans to rapidly expand. its portfolio of popular games and catch up with its biggest rivals.

Microsoft, owner of the Xbox platform and gaming network, said in January 2022 that it would buy Activision for $68.7 billion in the games industry’s biggest deal in history.

Without Activision and its variety of games on mobile devices, consoles and PCs, Microsoft might struggle to lure users to its fledgling subscription service to access games. Attracting subscribers has become a priority for large tech companies as traditional sources of growth such as ad sales become less reliable.

The US software company said it wanted the deal to help it compete with gaming leaders Tencent and PlayStation owner Sony, which criticized the deal.

But, in its complaint, the US Federal Trade Commission, which enforces antitrust law, said Microsoft had a habit of hoarding valuable gaming content.

“Microsoft has already shown that it can and will withhold content from its gaming competitors,” said Holly Vidova, director of the Federal Trade Commission’s Competition Bureau.

Today, we seek to stop Microsoft from taking control of a leading independent game studio and using it to harm competition in dynamic and rapidly growing game markets.

The agency has scheduled a hearing before an administrative law judge for August 2023.

Microsoft President Brad Smith said the company will fight the Federal Trade Commission. “While we believed in giving peace a chance, we have complete confidence in our cause and welcome the opportunity to present our case in court,” he said.

The Biden administration has taken a more aggressive approach to antitrust enforcement. The US Department of Justice recently halted a $2.2 billion merger between Penguin Random House, the world’s largest book publisher, and its smaller US rival Simon & Schuster.

“This is further evidence of the administration and antitrust war against big tech,” said Andre Barlow of law firm Doyle, Barlow & Mazard plc. The Trump and Biden administrations have prioritized big tech in antitrust enforcement.

Shares of Activision closed 1.5% lower at $74.76, while Microsoft fell from previous highs but closed 1% higher at $247.40.

Activision, which has long dreamed of being a Disney-like entertainment group, realized it needed more technical know-how and might have to trim its games lineup to shift resources to emerging areas like gaming. artificial intelligence.

Competition issues

The FTC said it’s concerned that popular Activision games, including “World of Warcraft” and “Diablo,” will continue to be offered on a range of consoles, PCs and mobile devices.

Although Microsoft has offered concessions to fix competition issues, the rapid pace of change in the tech and gaming industries could make those terms unnecessary over time.

To lure regulators, shortly after the deal was announced, Microsoft unveiled a new set of principles for its App Store, including open access for developers who meet privacy and security standards.

This month, in another heavily criticized move, Microsoft signed a 10-year commitment to bring “Call of Duty,” its popular first-person shooter series, to Nintendo 7974.T platforms. Microsoft made the same offer to Sony.

William Kovacic, a former FTC chairman who is now studying law, said antitrust challenges failed when the companies offered a “solution” for antitrust damages suffered in a transaction.

“I think we can expect with a high degree of certainty that he (the judge) will listen to these (Microsoft) arguments and can sympathize with them,” Kovacic said.

Chair Lena Khan and the two Democrats on the committee voted yes to the complaint, while Commissioner Christine Wilson, a Republican, voted no.

Activision Blizzard CEO Bobby Kotick told staff on Thursday that he is confident the deal will go forward.

“The claim that this deal is anti-competitive doesn’t fit the facts, and we believe we will prevail in this challenge,” he told employees, saying he believed the companies’ arguments would win “despite a ideology-driven regulatory environment and misconceptions about the technology industry. »

The deal also faces regulatory headwinds in Europe.

In late November, Microsoft was expected to provide solutions to EU antitrust regulators in the coming weeks to fend off formal objections to the deal, people familiar with the matter said. The deadline for the European Commission to issue a formal list of competition concerns, known as a Statement of Objections, is January.


Reporting by Diane Bartz. Additional reporting by David Shepherdson and Paresh Dev. Editing by Nick Zieminski, Alexandra Alper, Lisa Shumaker and Howard Guler

We would love to give thanks to the writer of this post for this incredible content

Microsoft’s gaming ambitions have sunk as the US seeks to block a deal with Activision


Explore our social media profiles along with other pages related to themhttps://www.ai-magazine.com/related-pages/