Et is the most spectacular antitrust lawsuit since Joe Biden took office as US President: The competition authority FTC announced on Thursday that it intends to block the takeover of the video game manufacturer Activision by the software group Microsoft, which was agreed in January of this year. Microsoft plans to pay $69 billion for Activision, which would be by far the company’s most expensive acquisition in its history.
Activision is one of the largest video game manufacturers in the world and is known for titles such as “Call of Duty”, “World of Warcraft” and “Candy Crush”. With control of such titles, Microsoft would have “both the means and the motive to harm competition,” and that would be bad for consumers, the FTC argues.
Microsoft was immediately determined to fight the battle with the antitrust authorities, including in court. Brad Smith, the company’s president, said: “We believed in giving peace a chance, but we have complete confidence in our position and look forward to the opportunity to present it in court.”
The EU Commission has also announced an investigation
It had been expected from the outset that the mega takeover would face strict antitrust scrutiny. The EU Commission also announced an in-depth investigation of the project in November and gave itself until next March to decide on any legal action.
The FTC is now the first agency to actually file a lawsuit. She expressed concern that Microsoft could keep Activision separate from rival gaming platforms. The group has already done this in the past, for example after taking over the games manufacturer Bethesda Softworks last year. It could also otherwise change the terms or prices for competitors’ access to Activision games or downgrade the quality of those games for competitors. Activision has so far offered its titles on various platforms, such as Sony and Nintendo consoles.
The antitrust lawsuit against Microsoft is the clearest signal to date that the American competition authorities under Joe Biden are taking a tougher course. Shortly after taking office last year, the president issued a decree directing authorities to crack down on dominant companies. He has also filled key cartel positions in his government with prominent critics of big tech.
Focus on the cartel power of the tech giants
First and foremost is Lina Khan, the 33-year-old chair of the FTC who is now responsible for the lawsuit against Microsoft. Khan once made a name for herself as a student far beyond her university with an essay in which she accused the online retailer Amazon of exploiting its monopoly. She later helped Congress in Washington prepare a comprehensive analysis of the tech giants’ antitrust power, which became the basis for several bills. However, these drafts have not yet made it through Congress.
Khan has also attracted attention with other maneuvers. For example, this year the FTC filed an antitrust lawsuit to prevent a planned takeover of Facebook parent company Meta. It was Within, the provider of a fitness app that works with virtual reality technology. What was unusual about the antitrust lawsuit was that, unlike Microsoft’s purchase of Activision, this would be a very small takeover, not even the price was disclosed. The FTC’s consideration is that Within could mature into a giant under the umbrella of Meta and thus make the internet company even more dominant. In that case, a court case began Thursday in California.
Microsoft shows willingness to make concessions
Around the turn of the millennium, Microsoft was already the subject of spectacular antitrust proceedings. At that time it was not about a takeover, but about the allegation of abuse of market power, and in the meantime even a break-up of the group was up for debate.
In the recent past, however, other American tech giants have been more in the sights of the antitrust authorities. For example, antitrust lawsuits were filed against Facebook and Google under Biden’s predecessor Donald Trump. Antitrust investigations are also underway against Apple and Amazon, but these have not yet led to any lawsuits.
In the past few days, Microsoft has shown itself willing to make concessions in courting the goodwill of the antitrust authorities. For example, the group signed an agreement to give competitor Nintendo access to Activision’s top game Call of Duty for ten years. Microsoft President Smith tweeted that his company was always ready to conclude a ten-year agreement with Japanese competitor Sony if he wanted to negotiate about it.
