Microsoft’s $68.7 Billion acquisition of Activision Blizzard Inc. was halted Tuesday by a group of gaming enthusiasts. Two weeks ago, the Federal Trade Commission filed a federal antitrust suit in San Francisco to stop the merger of one of the top video game publishers with the manufacturer of the Xbox console.
Activision is not named as a defendant in the new suit. The gamers, like the FTC, are asking for a court order preventing the companies from completing the transaction. They claim that Microsoft’s merger will give them enough power over the gaming industry to “foreclose rivals,” limit output, reduce consumer choice and raise prices. This would further hinder competition.
The suit states that Microsoft already has one of the industry’s most popular and largest gaming ecosystems. Microsoft could acquire an unrivaled position in the gaming market, allowing it to have the most iconic franchises and must-have titles.
In a statement to Bloomberg Law Tuesday, a Microsoft spokesperson supported the transaction. The statement stated that the deal would increase competition and provide more opportunities for game developers and gamers as we try to bring more games to more people.
The complaint claims that Microsoft would have an outsized market share in all the industry’s overlapping product areas, including console, PC, cloud-based and mobile gaming. Microsoft would also gain an advantage in the markets for top-tier AAA games, subscription services, and consoles.
According to the suit, both gaming divisions of the companies were formed by major mergers in the past. This results from a “dramatic wave of consolidation” after a “long history” of concentration in the gaming markets that continue the sector’s threat to its competitive landscape.
A merger would combine two large companies competing for skilled workers to create video games.
According to the complaint, this would decrease employee mobility and leverage, just as Activision is currently “engulfed” in lawsuits over its toxic culture, which includes gender discrimination, harassment, and other sexual misconduct. This allegation is similar to a separate shareholder case that challenges the deal from another angle.
A lawsuit filed by Activision shareholders and held by a Swedish pension fund accuses Activision of engineering a low-priced merger to exploit Activision’s workplace scandals. It also protects its CEO. The US District Court for Northern California filed the antitrust suit.