Microsoft officially responds to FTC’s lawsuit against the Activision Blizzard acquisition

What you need to know

• Two weeks after the FTC announced its intention to move to block Microsoft’s acquisition of Activision Blizzard, Microsoft has filed an official response.
• The response summarily denies all of the FTC’s complaints, and again lays out Microsoft’s strategy for acquiring Activision Blizzard.
• The response restates Microsoft’s intent to keep Call of Duty truly multiplatform, including bringing it to Switch.
• It also highlights how important mobile games are to Microsoft with the impending deal.

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It’s well known by this point that Microsoft is attempting to acquire storied video games publisher Activision Blizzard in a landmark deal worth nearly $69 billion. While Microsoft is certainly confident in its ability to complete the deal, it has still undergone scrutiny from a variety of governments and organizations. The latest to challenge the deal is the USA’s Federal Trade Commission, but Microsoft has now filed its official response to the FTC.

Two weeks ago, the FTC announced that it is suing to block Microsoft’s Activision Blizzard acquisition, confirming earlier reports hinting at it. The FTC’s complaints appeared to primarily hinge around the Xbox and Windows PC exclusivity of upcoming Bethesda Softworks titles Starfield and Redfall as reasons that Microsoft cannot be trusted with the vast library of IPs resting under the Activision Blizzard umbrella.

Despite the European Union refuting the FTC’s errant claims that Microsoft promised not to make future Bethesda titles exclusive following the company’s acquisition of Zenimax Media, the FTC has moved forward with its complaints. “Xbox anticipates that three future titles — [REDACTED], all of which are designed to be played primarily alone or in small groups — will be exclusive to Xbox and PCs.”

While Microsoft admits that three future Bethesda titles (one of which may be unannounced) will be exclusive to Xbox and Windows PCs, it has continued to wholeheartedly support multiplatform games such as Fallout 76, The Elder Scrolls Online, and Minecraft. Future first-party Xbox Game Studios titles such as Minecraft Legends will also be available on competing platforms in addition to Xbox and Windows PC.

Microsoft’s official response to the action once again summarizes the same talking points that Microsoft has been reiterating since the acquisition was announced. Starting with an introduction that calls out the FTC’s motivations for moving to block the deal. “Giving consumers high-quality content in more ways and at lower prices is what the antitrust laws are supposed to promote, not prevent,” Microsoft’s response states.

Microsoft has repeatedly claimed that it intends to bring Activision Blizzard’s games to more players following the acquisition, not less. For one, the company confirmed earlier statements by Microsoft Gaming CEO Phil Spencer that the primary focus of the acquisition isn’t Call of Duty or any of Activision Blizzard’s other “AAA” franchises — it’s mobile games, with King, a member of the Activision Blizzard group, representing over a third of the company’s overall revenue due to mobile games like Candy Crush.

“Microsoft is buying Activision to meet the billions of gamers who choose to play on mobile devices instead of a console or PC, and to learn how to make games that appeal to and engage them,” Microsoft stated. “Xbox also wants to make Activision’s non-mobile games more broadly available,” the response continues, referencing Microsoft’s continued commitment to not only keep Call of Duty multiplatform (despite Sony’s claims to the contrary), but to bring it to more players.

Recently, Microsoft entered into a 10-year agreement to bring the Call of Duty franchise to Nintendo Switch and Steam following the Activision Blizzard acquisition, and has reportedly attempted to offer a similar deal to Sony to no avail. Call of Duty has continued to be a focal point in Sony’s efforts to combat the impending deal, with the company claiming that Microsoft is aiming to hurt competition by taking Call of Duty away from competing platforms, but Microsoft outlines in its response to the FTC that this is not the case.

“A few companies, primarily located abroad, exercise outsize influence in this industry. Xbox is not one of them,” the response states. “Xbox’s console lags well behind Sony’s and Nintendo’s. While Xbox publishes games for consoles and PCs, it has far fewer popular exclusive games than Sony and Nintendo. And Xbox has almost no presence in mobile gaming, which is the largest and fastest-growing segment of gaming.”

Of course, the deal would also see Activision Blizzard games land on Xbox Game Pass on day one, joining many of the other best Xbox games already on the service, but Microsoft insists that its gaming services make gaming more accessible and affordable for millions of players — and that competitors are more than capable of delivering similar subscription models should they desire. “If (consumers) agree with Xbox’s vision, that will simply prompt more competition, including from companies like Sony, which already has a successful subscription service without even including its most popular (and exclusive) games on the day they are released.”

Microsoft’s acquisition of Activision Blizzard is slated to complete by June 2023, although the company will have to address concerns from regulators and organizations like the FTC first. The odds appear to be in Microsoft’s favor, however, as a major USA tech union has condemned the FTC for blocking the deal, and an antitrust expert who helped to defeat Microsoft in court in the 90s has described the FTC’s strategy as being “nutty.”

“Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers, and workers in the tech sector. As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone,” Brad Smith, Microsoft President, provided in an official statement to Windows Central.

Windows Central’s take

It’s unclear if anything concrete will come from the FTC’s attempts to block Microsoft’s acquisition of Activision Blizzard, as its motivations appear to be shaky, to say the least. There has been no indication that Microsoft will attempt to bully or harm competition following the acquisition, and Microsoft has made every attempt to assuage concerns by making public and legal commitments to do the exact opposite.

While I feel that it’s important for any major acquisition or merger to undergo scrutiny, there are dozens of industries that are in more danger of a monopoly than video games. This industry is more competitive than ever, with new publishers and studios emerging every day with innovative video games, products, and more. Even with Activision Blizzard under its belt, Microsoft would still be a third-place player after Sony and Nintendo.

If the FTC is desperate for something to do, why don’t they go for USA cellular networks, cleaning supplies, and even mass market food? At least try to find a legitimate concern to block Microsoft from acquiring Activision Blizzard, instead of bowing to the whims of the current and irrefutable market leader.