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Xbox Game Studios – Facing an FTC Antitrust Proceeding Against Microsoft’s Acquisition of Activision Blizzard?

Microsoft’s acquisition of Activision Blizzard for $69 billion must be validated by the FTC in the United States. However, the US authority would not be convinced by Microsoft’s arguments and could take legal action to block the operation.

At the beginning of the year, Microsoft announced its intention to buy the group Activision Blizzard and its licenses for more than $69 billion. The operation is of course big in the gaming industry (especially because it can upset the balance of power between the various players in the sector) and is therefore the subject of in-depth investigations by the competition authorities in many countries. – Brazil recently validated. the operation, but the UK is in doubt and Europe has also opened an investigation pending a decision later.

The effort of the operation

One of the most anticipated decisions nevertheless remain Federal Trade Commission (FTC), the American competition authority in the United States, which must ensure that a group that brings together on the one hand Microsoft (the manufacturer of Xbox and already owner of the group) Bethesda) and on the other hand Activision Blizzard (with its flagship licenses Call of Duty, Candy Crush and others World of Warcraft) does not constitute a de facto quasi-monopoly, which constitutes an abuse of a dominant competitive position.

For several months now, sony (probably Microsoft’s best enemy) is therefore particularly fiercely opposed to the deal, especially fearing (or pretending to fear) that Call of Duty will no longer be distributed on PlayStation to become an Xbox exclusive – Microsoft has already announced that it has offered a ten-year agreement with Sony, in which the Japanese group will be able to distribute the license on its consoles with a guarantee.

Microsoft’s defense

In this tense context, the FTC has been conducting an investigation into the operation and its consequences for several months now, and in that context the American authority has already conducted several hearings – and in particular of Satya Nadella and Bobby Kotick, the heads of Microsoft and Activision Blizzard respectively.

We know Microsoft’s arguments : The console gaming market ($58 billion) represents just over a quarter of the global video game industry market ($203 billion), and Microsoft is the smallest player in the console market (Xbox weighs in at 25% of the console market compared to 29% for nintendo and 46% for Sony). Under these conditions, according to Microsoft, even with the acquisition of Activision Blizzard, Microsoft’s position could not be dominant in the console market and even less in the video game market. It is clear that the equation hides certain parameters, such as the weight of the mobile market (Activision Blizzard also holds King Entertainmenta major player in the mobile market where Sony has little presence) or the weight of Microsoft as a publisher that is not limited to the console market.

But the FTC’s doubts

But today, according to Politico, citing three internal sources within the FTC, Commission lawyers are not entirely convinced by Microsoft and Activision Blizzard’s arguments. Consequently, legal action to block all or part of the operation could be launched “by next month” (to plainly prohibit the acquisition or to block part of it and only allow the acquisition of certain licenses or subsidiaries of Activision Blizzard for example). The commission’s four commissioners have yet to vote on whether to press charges or not, but the case is clearly on the table – so the investigation is far from a mere formality. Imagine initially (we mentioned it in detail last February). For the record, Microsoft is subject to a forfeiture clause of up to three billion dollars if the transaction does not go through.

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