Can the FTC block Microsoft’s ABK acquisition?

Legal Legal experts offer their thoughts on what will happen following the US regulator’s lawsuit against the $69 billion deal Microsoft’s proposed acquisition of Activison Blizzard is facing its biggest regulatory hurdle so far: a legal complaint issued by the US’ Federal Trade Commission. While the FTC does not have the authority to approve or disapprove any given merger, the legal proceedings kicked off by this complaint could ultimately lead to the deal being blocked by US courts. The FTC has cited concerns over the potential for Microsoft to make the best-selling Call of Duty franchise exclusive to its own ecosystem – pointing to the company’s decision to do the same with upcoming Bethesda titles such as Starfield – among other things. But the move is also part of a broader clampdown on massive tech mergers. GamesIndustry.biz spoke to two legal experts, with Gamma Law managing partner David B. Hoppe observing that this complaint is in line with the FTC’s “strategy of expanded antitrust enforcement.” David B. Hoppe, Gamma Law “Part of this is to actively review so-called ‘vertical’ mergers, which involve companies that are not direct competitors, but are at different points in an industry stack,” he explains. “Here, Activision could be viewed as a sort of ‘supplier’ to Microsoft, since it produces games that can be played on the Xbox. In the United States, vertical mergers have not had much attention in the past, since they were viewed in most cases as being favorable to consumers. “The theory has been that integration of companies at different points in the value chain would lead to lower prices to consumers. However, it’s not clear that this has actually been the case. Plus, the current view among more liberal economists in the United States is that other factors should be considered beyond just whether a merger will result in higher costs. These other factors include the impact on innovation and labor markets, for example.” Richard Hoeg, managing partner of The Hoeg Law Firm, adds: “Candidly, I believe the primary motivation is the FTC’s increasing emphasis on aggressive enforcement of antitrust laws overall, and with respect to large technology companies in particular. “Ostensibly, their biggest concerns are that Microsoft’s control of major AAA franchises – especially Call of Duty – would give them the ability and incentive to remove those franchises from rival platforms and allow them to unfairly monopolize hardware sales, subscription services, and cloud gaming.” Will the FTC win this legal battle? Microsoft has been readying its defence somewhat publicly, with company president Brad Smith penning a piece for the Wall Street Journal about the vision behind the deal and Xbox boss Phil Spencer promising Call of Duty on Nintendo consoles and Steam for ten years if the deal is approved (although, as our own Chris Dring discussed, the latter is something of a sideshow). “Many agencies are basically betting that a company will drop out based on the pressure they
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