It comes as no surprise that the US Federal Trade Commission (FTC) has moved to block Microsoft’s deal to acquire games publisher Activision. The move was long expected as regulators ran the rule over the proposed $69 billion buyout. But on Thursday the FTC finally moved and filed a legal action to prevent the deal from going through in a blow to Microsoft’s hopes of pushing the deal through.
The objections centre around whether the deal will give Microsoft disproportionate power in the games industry. Activision Blizzard, which owns games such as Call of Duty, Overwatch and Candy Crush, has some of the biggest titles in the market.
Rival Sony has raised concerns, mainly around Call of Duty, a major franchise for the PlayStation platform. If Microsoft made Call of Duty an exclusive to its platform in the future that could seriously hamper its rivals. And even a guarantee from Microsoft that Call of Duty would appear on PlayStation for another decade seems to have failed to placate these fears.
It’s not just about the games industry, though. Increasing concerns about the monopoly powers of big tech have focused an uncomfortable spotlight on how these companies are doing business. There is talk of forcing the break up of large entities such as Google and Facebook-owner Meta. And it shows that even Microsoft, which has come through its own battles with regulators and spent the past few years cultivating a more benign reputation, is not exempt from scrutiny.
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The FTC action doesn’t mean that the deal will not proceed eventually. Concessions may be made, on both sides, to get it over the line. But the FTC action may just be the starting point for Microsoft’s woes. The deal must be examined by regulators in 16 countries, and the European Commission has already announced it will carry out an in-depth investigation of the proposed acquisition.
Microsoft has pinned a lot on this. If the deal fails it will be a major blow to its hopes of broadening its appeal to gamers and supercharging its streaming games offering. And it will also be a warning shot across the bow of other tech giants and their future plans: every move will be scrutinised.
