Microsoft Settles Antitrust Lawsuit Over Activision Blizzard Acquisition
Microsoft's acquisition of Activision Blizzard has been anything but smooth sailing, but it appears that an end to the saga is in sight. After a fierce fight with international regulatory bodies, the tech giant has settled a lawsuit brought against the company by a group of concerned gamers.
In 2022, gamers across multiple U.S. states filed a lawsuit against Microsoft in opposition to the company's high-profile acquisition of publisher Activision Blizzard. Among the concerns raised was the potential for Microsoft to become one of the largest video game companies in the world, allowing it to take part in anti-competitive strategies such as limiting output and reducing consumer choice. Many were also concerned that Activision Blizzard's most popular franchise Call of Duty, might become an Xbox exclusive, locking out the large PlayStation player base and forcing them to either play on PC or Xbox Series consoles.
Whether the Acquisition is in the Best Interest of Gamers is Still up for Debate
The lawsuit was filed two weeks after the Federal Trade Commission blocked the deal, citing monopoly concerns. The company also faced opposition from the UK’s Competition and Markets Authority, which finally relented in October last year after extending the deadline and revising the deal. It should be noted that some of the concerns of the gamers outlined in the lawsuit have come to pass. Mentioned in the lawsuit is the claim that Microsoft is undermining competition by firing a significant amount of employees and rapidly increasing its Game Pass subscriber base.
Microsoft just recently finished its second round of layoffs for 2024, cutting 2,550 employees and closing three studios before year-end. Additionally, in anticipation of Activision games coming to Game Pass, the service’s subscription base swelled from roughly 25 million subscribers to over 35 million and received a multi-tiered price hike that angered fans. However, on Monday, both sides notified the court that they had struck a deal to dismiss the lawsuit “with prejudice” (meaning the lawsuit cannot be refiled in the future). The terms of the agreement were not publicly disclosed. However, the court filing notes, "Each party shall bear their own costs and fees”.
The FTC is now the only regulatory body still standing in the way of Microsoft’s ambitious acquisition. The company's Chief executive, Satya Nadella, has pushed back, testifying that Microsoft is not a dominant player in certain gaming markets and that Game Pass subscriber metrics are a “meaningless apples-to-oranges comparison”. Many, including Joseph Saveri, a lawyer for the gamers, rebuke this view, writing, “As time passes, Microsoft continues to increase its market power, prices have increased, games continue to be canceled, development capacities continue to diminish, and Game Pass continues to trend towards a monopoly,”.
For now, the acquisition will continue and is all but set in stone. Recently, Microsoft scrapped the $1 Game Pass trial in anticipation of the Call of Duty series being added to the service, most probably expecting a dramatic increase in subscribers and looking for a way to best capitalize on their controversial investment.
