Microsoft Tells FTC Activision’s $69 Billion Deal Won’t Harm Competition

Microsoft on Thursday filed a response to a Federal Trade Commission lawsuit seeking to block its $68.7 billion purchase of Activision Blizzard, arguing that it won’t hurt competition in the video game industry.

The FTC said earlier this month in its lawsuit challenging the acquisition that the software giant would “harm competition” among game console makers, including Sony and Nintendo. Microsoft countered in its filing that the acquisition was to help its Xbox unit become more competitive.

“Xbox wants to grow its presence in mobile gaming, and three-quarters of Activision’s gamers and more than a third of its revenue come from mobile offerings,” Microsoft said in its 37-page response. “Xbox also believes it’s good business to make Activision’s limited portfolio of popular games more accessible to consumers, bringing them to more platforms and making them more affordable.”

The deal, announced earlier this year, is the largest ever for the software maker and also in the gaming industry. Microsoft, which also makes the Xbox video game console, has spoken to regulators around the world in a bid to secure approval for its acquisition. Microsoft announced earlier that it expects to close the deal around summer 2023.

The FTC’s decision against Microsoft marks one of the largest efforts by the US government to take on the tech industry, which has seen companies like Microsoft, Apple, Amazon, Alphabet and Meta become some of the most popular companies of the planet. Amid all this growth, competitors and regulators have wondered if the tech industry has too much power and if the companies are acting as a monopoly.

The agency argued in its Dec. 8 lawsuit against the software giant’s acquisition of the Call of Duty maker, saying Microsoft had used past acquisitions to create several high-profile upcoming titles like the space exploration game Starfield and the device-exclusive vampire shooter Redfall. powered by its software. Microsoft said it offered Sony the right to sell the military shooter as part of its PlayStation Plus service, but “Sony refuses to deal,” Microsoft said in its filing.

“The acquisition of a single game by the third console maker cannot disrupt a highly competitive industry,” Microsoft said in its response. “This is particularly the case where the manufacturer has made it clear that they will not refuse the game. The fact that Xbox’s dominant competitor has so far refused to accept Xbox’s proposal does not justify blocking a transaction that will benefit consumers.”

Microsoft said it hopes an amicable resolution can be found that benefits everyone in the industry.

“Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers and tech workers,” Microsoft president and vice president Brad Smith said in a statement.

Activision CEO Bobby Kotick also defended the deal in a separate statement Thursday, saying “there is no reasonable and legitimate reason to prevent our transaction from closing.”

The FTC did not immediately respond to a request for comment.