Like its counterparts at the CMA in the United Kingdom and the European Commission, which have decided to launch more in-depth examinations before rendering their verdict, the federal agency does not see with a good eye the fact that the manufacturer of Xbox would obtain control of the franchises of the largest independent publisher in the United States, including Call of Duty, which is the subject of much debate and negotiation as to its future on all platforms.
Despite Microsoft’s promises regarding its desire to continue to release Call of Duty on PlayStation, without forgetting to add Nintendo and Steam consoles to the mix, the FTC believes that this acquisition would put Microsoft in a position to heavily penalize its competitors, both in the field of console sales than in that of subscription video games and cloud video games, two areas that come together in a single vortex, the Xbox Game Pass.
It must be said that there is a flaw in Microsoft’s argument when it repeatedly declares that this acquisition aims to make games accessible on as many platforms as possible and that agencies like the CMA and the FTC l have noted: this contradiction is the fact of having made games like Starfield and Redfall Microsoft exclusives (Xbox and PC) as soon as the takeover of Bethesda was validated.
Microsoft defends itself for misleading the public on the exclusivity of Bethesda games
“Microsoft has already shown that it can and wants to withhold content from its rivals. Today, we seek to stop Microsoft from taking control of a leading independent game studio and using it to harm competition in several dynamic and growing game markets.“, says Holly Vedova, director of the FTC’s competition bureau. In her defense, Microsoft tries to explain that there is a difference between keeping exclusivity on new products like Starfield and red fall and do so on series that already had cross-platform audiences before they were acquired. This is for example the case of Minecraft, of which Microsoft has always encouraged cross-platform development.
For all future Bethesda games, on the other hand, Microsoft’s promise stopped at a “case-by-case” review of their possible release on competing platforms. According to Microsoft’s reasoning, the fact that Starfield either a new solo license that has no already established community implies that making it an exclusive is not likely to harm PlayStation. Of course, Microsoft refrains from mentioning that Starfield is also the successor to one of the most popular RPGs in the world and that its absence on the rival console is nothing anecdotal, especially since the game was obviously also in development on PS5 before the Bethesda takeover.
Microsoft decided to make several Bethesda titles, including Starfield and Redfall, Microsoft exclusives, despite having assured European antitrust authorities that it had no interest in withholding games from competing consoles.
Nothing is lost for Microsoft
“By controlling Activision’s successful franchises, Microsoft would have both the means and the incentive to harm competition by manipulating Activision’s prices, degrading the quality of Activision’s games or the player experience on competing game consoles and services, changing the terms and timing of access to Activision content, or denying content to competitors altogether, which would harm consumers“, adds the press release.
The FTC is not content here to launch a phase II review like the CMA and the European Commission, it intends to file a complaint against Microsoft to oppose. In fact, the Commission in charge of the file voted in favor of an administrative complaint 3 against 1. Christine S. Wilson, the only Republican of the group, found herself in the minority while certain rumors evoked a situation of 2 against 2. The communiqué clarifies that the issuance of an administrative complaint marks the beginning of a procedure in which the allegations will be judged in a formal hearing before an administrative judge.
The FTC’s complaint does not mean that the proposed acquisition falls through, far from it, but it does mean that Microsoft, the usual darling of the government who is generally not denied much, is doing facing an unusual legal hurdle. According to Axios, the fact that the FTC has chosen to file its lawsuit in its own administrative tribunal and not in federal court is not (yet) likely to seriously threaten the acquisition process. It could, however, slow it down and prevent Microsoft from becoming the owner of Activision Blizzard before the end of its fiscal year, in June 2023.
Microsoft reacts… Bobby Kotick too
In the meantime, the announcement is important enough to make Microsoft react immediately, through the voice of its vice-president Brad Smith. “We continue to believe that our agreement to acquire Activision Blizzard will broaden competition and create more opportunities for gamers and game developers. We have been committed since day one to addressing competition concerns, including offering concessions to the FTC earlier this week. Although we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it to the court.“, he published on Twitter.
Even more significantly, the FTC complaint brought Bobby Kotick out of his lair for the first time since the announcement of the proposed acquisition last January. The CEO of Activision Blizzard, who is just waiting for a signal to be able to flee with a monumental golden parachute and leave behind all the pans denounced by his mandate before the announcement of the acquisition, published a letter intended to concerned shareholders. In it, Kotick acknowledges that the announcement of the complaint “sounds alarming“, but continues to have “confidence that this agreement will be concluded“.
“The allegation that this agreement is anti-competitive does not fit the facts, and we believe we will win this challenge. The competitive landscape is changing, and, quite simply, a Microsoft-ABK combination will be good for gamers, good for employees, good for competition, and good for the industry. Our players want choice, and that’s exactly what we’re giving them. We believe these arguments will win despite a regulatory environment driven by ideology and misconceptions about the tech industry“, he concludes.