FTC Must Pursue Administrative Case Against Unlawful Microsoft-Activision Merger

Following news that Judge Jacqueline Scott Corley of the Northern District Court of California has denied the Federal Trade Commission’s request for a preliminary injunction of Microsoft’s $69 billion acquisition of video game publisher Activision, the American Economic Liberties Project released the following statement.

“When Microsoft’s own emails say they are building a ‘moat’ and trying to ‘spend’ their competitors ‘out of business,’ that should be enough for the court to hit pause. The fact that Judge Corley’s son works for Microsoft taints the outcome at a time when judicial ethics are top of mind for many,” said Lee Hepner, Legal Counsel at the American Economic Liberties Project. “The FTC should appeal this decision and pursue an emergency stay of Judge Corley’s Order so that it can continue its administrative case against Microsoft’s monopoly ambitions.”

In December 2022, the Federal Trade Commission sued to block Microsoft’s $68.7 billion acquisition of Activision-Blizzard, a merger that would combine two of the largest game developers in the world. Activision — thanks to a merger with Blizzard in 2008 — publishes some of the world’s most popular AAA game titles. Already, Microsoft is the third largest game developer globally, already owns around 30 gaming studios, and owns the Xbox gaming platform.

In April 2023, the UK Competition and Markets Authority blocked Microsoft’s acquisition of Activision-Blizzard after a robust investigation. Despite the decision, now under appeal, Microsoft has signaled it still intends to close the deal by July 18. That threat led the FTC to seek a preliminary injunction to halt the deal in June 2023.

With Xbox and Activision-Blizzard’s massive catalog of games, this merger would allow Microsoft to capture and dominate a large portion of the cloud gaming industry, consolidating it into a small group of firms who control walled gardens of content, data, and advertising. Microsoft could use this power to withhold the must-have games and products of Activision Blizzard from other consoles, restricting them to be exclusive to Microsoft’s cloud gaming platforms. The merger would likely raise prices down the line for gamers and give Microsoft crucial power over consumer data — knowing well that consumers’ alternatives are scarce and expensive.

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