FTC Ends Litigation Against Microsoft's Activision Acquisition, A Shifting Landscape

FTC Abandons Lawsuit Against Microsoft’s Acquisition of Activision Blizzard

The Federal Trade Commission (FTC), now under Republican control, has decided to abandon efforts initially set in motion during President Joe Biden's administration to block Microsoft’s $69 billion acquisition of Activision Blizzard, the renowned maker of the Call of Duty franchise.

In an official order issued on Thursday, the FTC determined that "the public interest is best served by dismissing the administrative litigation in this case." This move marked a significant shift in the agency’s stance, especially as this was not the only case from the previous administration being dismissed on the same day. Earlier, the FTC also stated it would drop a lawsuit against PepsiCo.

Context of the Acquisition

Microsoft's announcement regarding the acquisition came in January 2022, positioning it as one of the most substantial tech deals ever aimed at enhancing the competitiveness of its Xbox gaming console, which has struggled in market share relative to competitors like Sony’s PlayStation and Nintendo. The FTC, then led by Democratic Chairwoman Lina Khan, filed an antitrust lawsuit in December 2022, arguing that the acquisition would allow Microsoft to suppress competition in various gaming markets.

Despite these concerns, by October 2023, Microsoft completed the purchase of Activision Blizzard after receiving necessary approvals, notably from the United Kingdom's competition authority. This series of events showcases the complex landscape of regulatory scrutiny and corporate strategy in the tech industry.

Implications of the FTC’s Decision

Brad Smith, Microsoft's vice chairman and president, described the FTC's recent decision as a victory for gamers and praised the agency for its announcement on social media, suggesting a vindication for Microsoft's strategy moving forward. Smith remarked, "We are grateful to the FTC for today’s announcement," highlighting the company's commitment to maintaining accessibility of titles like Call of Duty on various platforms, including PlayStation.

Since the acquisition, Microsoft has indeed kept major titles available on rival consoles, supporting a strategy that appears to favor broader access rather than exclusivity. Games like Obsidian's Grounded and a revamped edition of Gears of War are examples of this commitment.

Political Shift in the FTC

The landscape of the FTC is noteworthy as it comprises three Republican commissioners currently, raising questions about the direction and oversight of future antitrust actions. The dismissal of these cases from the Biden administration adds to the ongoing discussion regarding how political affiliations influence regulatory measures. Chairman Andrew Ferguson criticized the previous administration’s approach, referring to the PepsiCo case as a "dubious political stunt" aimed at gaining political leverage just before the transition of power.

Conclusion

While the FTC's decision signifies a notable shift in regulatory approach, it also opens up questions about the future of corporate acquisitions within the tech industry. The delicate balance between competition and corporate consolidation continues to be a pivotal theme as the FTC navigates its mandate in an evolving political and economic landscape.