Microsoft-Activision Deal: FTC's Appeal And What It Means

Luna Greco

5 min read

Post on May 13, 2025

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The FTC's Concerns and Arguments Against the Merger

The Federal Trade Commission (FTC) has voiced serious concerns about the potential anti-competitive effects of the Microsoft-Activision merger. Their arguments center around two key areas: stifling competition and market domination.

Anti-Competitive Practices

The FTC's primary concern revolves around Microsoft's potential to leverage its acquisition of Activision Blizzard to engage in anti-competitive practices, particularly regarding the immensely popular Call of Duty franchise. Their worries include:

• Restricting access to Call of Duty on rival consoles: The FTC fears Microsoft could make Call of Duty exclusive to Xbox, or severely limit its availability on PlayStation and Nintendo Switch, harming competitors and potentially driving gamers to the Xbox ecosystem. This would create an uneven playing field and disadvantage PlayStation, potentially pushing players toward Xbox.
• Leveraging Activision's IPs to harm competitors' market share: Beyond Call of Duty, the FTC is concerned that Microsoft could use other Activision Blizzard IPs like Candy Crush, Warcraft, and World of Warcraft to gain an unfair advantage, potentially pushing out competitors and reducing the diversity of games available to consumers. This could also result in fewer choices for players.
• Potential for higher prices and reduced innovation in the gaming industry: By consolidating market power, the FTC argues that the merger could lead to higher prices for games, less innovation, and a decrease in the overall quality of gaming experiences. This would impact the gaming industry in a long term effect.

Market Domination

The FTC argues that the merger would give Microsoft an unacceptable level of market power in the gaming industry. Their argument rests on:

• Microsoft's existing dominance in the PC gaming market: Microsoft already holds a significant share of the PC gaming market through Windows and Xbox Game Pass.
• Activision Blizzard's strong presence in the console and mobile gaming sectors: Activision Blizzard's portfolio of games spans across consoles and mobile, adding substantial market share to Microsoft's existing dominance.
• Combined market share leading to monopolistic practices: The FTC believes the combined market share of Microsoft and Activision Blizzard would create a near-monopoly, allowing Microsoft to dictate terms to developers, publishers, and ultimately, gamers. This would severely limit competition in the industry.

Microsoft's Defense and Counterarguments

Microsoft has vehemently defended the merger, arguing that it will benefit consumers and foster innovation. Their counterarguments focus on two main points: commitment to multi-platform releases and claims of market growth and innovation.

Commitment to Multi-Platform Releases

Microsoft has repeatedly pledged to maintain Call of Duty availability on PlayStation and other platforms. Their arguments include:

• Long-term contracts with Sony and other competitors: Microsoft has publicly stated its intention to sign long-term contracts to ensure Call of Duty remains on PlayStation.
• Plans to release future Activision games across multiple platforms: Microsoft has emphasized its commitment to releasing future Activision Blizzard games on multiple platforms, ensuring accessibility for gamers across different ecosystems.
• Arguments for the benefits of the merger for consumers: Microsoft argues that the merger will lead to greater investment in game development, leading to better games and more choices for gamers.

Innovation and Market Growth

Microsoft contends that the merger will not stifle competition but instead drive innovation and expand the gaming market. Their arguments include:

• Investment in game development and technological advancements: Microsoft argues that the combined resources will lead to increased investment in game development, potentially creating more and better games.
• Potential for creating new gaming experiences and reaching a wider audience: The merger could lead to the creation of new game experiences and reach a broader audience, expanding the gaming market.
• Claims of increased competition through greater resources and capabilities: Microsoft claims that the merger will actually increase competition by giving them greater resources to compete with other major players in the industry.

Potential Outcomes and Implications

The FTC's appeal has several potential outcomes, each with significant implications for the gaming industry.

Scenarios Following the Appeal

Several scenarios could unfold following the appeal:

• Full merger approval: The court could uphold the initial approval, allowing the merger to proceed without further obstacles.
• Merger blocked entirely: The court could side with the FTC, completely blocking the merger.
• Conditional approval with stipulations: The court may approve the merger but with conditions, such as requiring Microsoft to license Call of Duty to competitors or other stipulations to address the FTC’s anti-competitive concerns.

Impact on the Gaming Industry

The outcome of the appeal will have a profound impact on the gaming industry:

• Changes in game subscription services: The merger could significantly reshape the landscape of game subscription services.
• Effects on independent game developers: The dominance of a merged entity could influence the opportunities and challenges faced by independent game developers.
• Shifting power dynamics within the gaming industry: The outcome will inevitably shift the power dynamics within the gaming industry, potentially creating new challenges and opportunities for various players.

Conclusion

The FTC's appeal of the Microsoft-Activision deal has significant implications for the future of the gaming industry. The outcome will shape the competitive landscape, influence game pricing, and affect the availability of popular titles like Call of Duty. While the future remains uncertain, understanding the arguments and potential outcomes is vital for gamers and industry stakeholders alike. Stay informed about the Microsoft-Activision deal and its legal battles to stay ahead of the curve and understand how this major acquisition will reshape the gaming world. Follow the developments around this crucial Microsoft-Activision merger.