Tech giant Microsoft is known for predicting successful software coalitions over the years, with a preference for consumers. Last year, the acquisition deal of two different tech companies caused uproar in the industry and paved the way for the Microsoft Activision Blizzard lawsuit.
A Précis Of The Microsoft Activision Acquisition:
On January 18, 2022, Microsoft intended to land the largest player in the gaming industry, Activision Blizzard for an incredible $68.7 billion in cash. Betting the future of gaming on the cloud devoid of consoles, the tech behemoth would become the third-largest player behind Tencent and Sony, by getting rewarded with ownership over globally renowned franchises including Call Of Duty, Crash Bandicoot, Warcraft, Diablo, Overwatch, and Candy Crush.
On completion, this consolidation was to be considered one of the biggest mergers and acquisitions of 2022 and also the largest video game acquisition in history. Activision Blizzard’s 2022 Revenue was valued at $7.52 billion while Microsoft’s was estimated at $198.27 billion.
A Précis Of The Microsoft Activision Blizzard Lawsuit:
But not every M&A is accepted smoothly and has its set of obstacles to clear. Microsoft could own Activision, Blizzard Entertainment, and King under the Xbox Game Studios with the deal that was set to close by Spring 2023, but not without clearing the accusations. The Microsoft Activision Blizzard lawsuit is a formal complaint of hindering competition scrutiny filed by both the U.S. Federal Trade Commission (FTC) and the European Commission (EC).
This isn’t the first time that Microsoft has hit roadblocks. Under co-founder Bill Gates, the Windows OS-maker was investigated by the FTC in the 1990s, under the hypothesis of Microsoft’s growing monopoly power. In testimony before the United States Senate, Gates rejected the need for software industry regulation.
Microsoft Activision Blizzard Lawsuit Wins Dismissal:
Multinational tech company NVidia sided with the tech giant on the premise of the Microsoft Activision Blizzard controversy.
Amidst Microsoft’s squabble with the regulatory institutions, there was another lawsuit hinging on the same aspects – a group of video game plaintiffs alleged that the proposed acquisition would harm market competition.
Plaintiffs’ allegations state that the merger could cause only “higher prices” but “lesser innovation, creativity, consumer choice, and output, and other anticompetitive effects.
– Demartini v. Microsoft Corp
San Francisco-based U.S. District Judge Jacqueline Corley presiding over the matter awarded the win to Microsoft, dismissing the private consumer antitrust lawsuit by basing the allegations as insufficient. without supporting claims of why and how it would harm market competition. Plaintiffs were given a respite of 20 days to redefine the legalities of their claims.
A lawyer for the plaintiffs, Joseph Saveri revealed their plans of submitting an amended Microsoft Activision Blizzard lawsuit to “address all the indications of the judge that we needed more allegations” with more factual details, to Reuters. Judge Corley tossed the planned hearing on the debate of issuing a preliminary injunction without an iota of evidence.
On April 12, a status hearing has been scheduled.
Microsoft Activision Blizzard Lawsuit With The FTC And EC:
The Microsoft-Activision Blizzard lawsuit filed by the FTC, entailed to block the takeover citing concerns based on the notorious reputation of Microsoft buying gaming content to withhold it from competitors. FTC Director Holly Vedova spoke in a statement:
“We seek to block Microsoft from gaining control of an independent leader of gaming and using it to harm the fast-evolving gaming market”
While the U.S. Antitrust Law permits even private consumers to challenge mergers and acquisitions, the result of this dismissal does not affect the regulatory challenge issued by the Federal Trade Commission. Microsoft faces competition scrutiny in the EU and UK as well.
An evidentiary hearing is scheduled in August, before the FTC while Microsoft has denied its hand in harming video game competition. The tech giant plans of building a case around terming the acquisition, a vertical merger.
In a statement issued previously, President Brad Smith reminded people of Sony’s exclusive games which were 4x more than that of Microsoft and refuted worries hinging on popular games like ‘Call of Duty’ being made exclusive to Microsoft’s Xbox system, which could lead to rival PlayStation games losing out on it.
