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News Politico: Feds likely to challenge Microsoft’s $69 billion Activision takeover

VolcanicDynamo

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Per Politico, in an article written by Josh Sisco - "A lawsuit would be the FTC’s biggest merger challenge to date under Chair Lina Khan.":

The Federal Trade Commission is likely to file an antitrust lawsuit to block Microsoft’s $69 billion takeover of video game giant Activision Blizzard, maker of the hit games Call of Duty and Candy Crush, according to three people with knowledge of the matter.

A lawsuit would be the FTC’s biggest move yet under Chair Lina Khan to rein in the power of the world’s largest technology companies. It would also be a major black mark for Microsoft, which has positioned itself as a white knight of sorts on antitrust issues in the tech sector after going through its own grueling regulatory antitrust battles around the world more than two decades ago.

A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, two of the people said. However, the FTC staff reviewing the deal are skeptical of the companies’ arguments, those people said.

The investigation remains ongoing, but much of the heavy lifting is completed, including depositions of Microsoft chief executive Satya Nadella and Activision head Bobby Kotick, the people with knowledge of the investigation said. If the agency does move ahead with a case, it could come as soon as next month, said the people, all of whom were granted anonymity to discuss a confidential matter.
Central to the FTC’s concerns is whether acquiring Activision would give Microsoft an unfair boost in the video game market. Microsoft’s Xbox is number three to the industry-leading Sony Interactive Entertainment and its PlayStation console. Sony, however, has emerged as the deal’s primary opponent, telling the FTC and regulators in other countries that if Microsoft made hit games like Call of Duty exclusive to its platforms Sony would be significantly disadvantaged.

The FTC declined to comment.
This is a potentially big blow to the Microsoft/Activision-Blizzard merger, and I'm glad for that. The consolidation of the video game industry through these mergers and acquisitions has been terrible. We'll have to see how this shakes out, as nothing is currently guaranteed, but if this means the merger is blocked? Good.
 

Xaltmas

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I don't know what I want more, Diablo IV on Game Pass or to see what Microsoft does it the deal does get blocked/dropped. Not getting Activision-Blizzard isn't the end, and they've shown they are more than willing to break out the war chest. They were willing to drop $70 BILLION. What would they spend some of that money on instead?

Exciting stuff all around.
 
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WestEgg

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Take it with a grain of salt:


Edit: Looks like he deleted it, but it was Mat Piscatella, the NPD guy, saying he felt it was a bit clickbaity and nothing is really decided yet.
 

Barely Able

Inkling
Per Politico, in an article written by Josh Sisco - "A lawsuit would be the FTC’s biggest merger challenge to date under Chair Lina Khan.":


This is a potentially big blow to the Microsoft/Activision-Blizzard merger, and I'm glad for that. The consolidation of the video game industry through these mergers and acquisitions has been terrible. We'll have to see how this shakes out, as nothing is currently guaranteed, but if this means the merger is blocked? Good.
I say we decide this by having the big 3 send representatives from their Bellevue/Redmond area headquarters/ancillary studios and have an old-timey glove slapping fest. If Microsoft wins, they can buy Activision. If they lose, Nintendo gets the Banjo license and Sony can have the new Bethesda games on their consoles.

Sony has this on lock with Sucker Punch right there
 

Lord Azrael

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This is one of the few times where I'd be okay with a huge company getting bought out. Activision is a shitshow - if this means kicking out Bobby Kotick and getting everyone there equitable treatment and better working conditions, then good. And it would make Microsoft more competitive in the industry. They are still behind both Sony and Nintendo. They have been really innovative in advancing the space with Game Pass, and anything to force competitors to adapt is good.
 

ZephyrPhoenix

Everything Rises and Everything Eventually Falls
ye who cares. For once, I actually want a company to get bought out. Activision has been a shitshow for years and that fact has intensified recently. If it means things can be changed with Microsoft as the owner then I'm all for it. Fuck everything else.
 

risnuff

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This is one of the few times where I'd be okay with a huge company getting bought out. Activision is a shitshow - if this means kicking out Bobby Kotick and getting everyone there equitable treatment and better working conditions, then good. And it would make Microsoft more competitive in the industry. They are still behind both Sony and Nintendo. They have been really innovative in advancing the space with Game Pass, and anything to force competitors to adapt is good.

Agreed. If this gets shot down, Kotick remains in charge, and the Activision portion of ABK remains the CoD factory. If it goes through, Kotick eventually gets shown the door, and some of Activision's other IPs may actually get some releases.
 
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Dardan Sandiego

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This is gonna be interesting. Sony's arguments for blocking it have been kinda bullshit, making this move look somewhat politically motivated (especially considering Lina Khan's comments in the past) which I'm not really against. Given the last I don't know how many years of rampant tech consolidation the pendulum had to swing the other way eventually.
 
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Lord Azrael

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I think prevention of monopolies is a bigger picture and is more important than "maybe they'll make the company better!"
I don't agree that this constitutes a monopoly. This would put them on par with other, more successful competitors in the space. Similar to when T-Mobile bought Sprint: they were a distant third and used the purchase to bolster themselves in the market.
 

N75

Moblin
I think prevention of monopolies is a bigger picture and is more important than "maybe they'll make the company better!"
There’s also no guarantee that Microsoft will make things right besides removing Kotick. We know they’ve been pretty hands-off with their other studios, which has led to problems. That’s also completely ignoring that a company as big as MS is always going to have skeletons.

I may be way off-base here, but a lot of the positive reception to this buyout besides console wars feels like people not wanting to feel bad about buying the next Crash or Diablo game (let’s face it, Call of Duty is too big to affected by something like this).
 

Terrell

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I’ve said it elsewhere and I’ll say it here: while SIE, MS and regulators have turned this into a slap fight over whether or not Activision Blizzard content - CoD in particular - is an essential input (it’s not), it misses a far more substantive argument to be made that a publisher acquisition diminishes the ability of independent developers to seek equitable publishing deals. And the fact that such a consideration isn’t being made by ANYONE makes the regulators look like clowns.
 

Lord Azrael

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I’ve said it elsewhere and I’ll say it here: while SIE, MS and regulators have turned this into a slap fight over whether or not Activision Blizzard content - CoD in particular - is an essential input (it’s not), it misses a far more substantive argument to be made that a publisher acquisition diminishes the ability of independent developers to seek equitable publishing deals. And the fact that such a consideration isn’t being made by ANYONE makes the regulators look like clowns.
That is a very good point that even I did not consider. Thanks for raising it
 
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I can't help but feel like I'm missing something with this whole story. I personally prefer a world where all these big publishers aren't getting bought up but I don't really see how this acquisition would come to a conclusion where it would be blocked. Microsoft seems like such an overwhelmingly distant competitor in the video game space to me. Are there actual monopoly concerns or concerns that the move would prevent Microsoft's competition (Sony and Nintendo) from competing? That sounds completely ridiculous to me. Is it just as it pertains to the US market? I suppose that's more believable but still doesn't really sound right to me.
 
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em

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The merger going to go through. What's to be determined are the restrictions on the deal -- will Microsoft have to spin off some studios/franchises, allow some measure of independence, or have to make promises on product availability/pricing, etc.
 

9-Volt

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The merger going to go through. What's to be determined are the restrictions on the deal -- will Microsoft have to spin off some studios/franchises, allow some measure of independence, or have to make promises on product availability/pricing, etc.
Yeah, they're still going to buy them but won't be allowed to keep the IP's exclusive to their platform. Because it'd literally be "rich guy using its limitless money to hurt the competitors" case. MS is just too big to have a fair competition in the market.

Hell, MS is just too big corporation for anything. Bernie was right, tech companies should not be allowed to get to these incredible sizes.
 

Dekuman

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I hate ActiBlizz's unaccountable CCP boot licking as much as the next fellow, but Microsoft owning such a huge independent publisher is not good for the industry no matter how nice Phil Spencer sounds. Corporations are dictatorships. Once Phil is gone, and or if MS strategic objectives change, they can yank franchises from competing platforms whenever they like.

I don't support this takeover and I hope it fails.
 

Tentacle-tropes

Paratroopa
I’ve said it elsewhere and I’ll say it here: while SIE, MS and regulators have turned this into a slap fight over whether or not Activision Blizzard content - CoD in particular - is an essential input (it’s not), it misses a far more substantive argument to be made that a publisher acquisition diminishes the ability of independent developers to seek equitable publishing deals. And the fact that such a consideration isn’t being made by ANYONE makes the regulators look like clowns.
I’d argue they look like clowns already for trotting out some of the arguments they have. We have regulators actually insisting that Nintendo, PC, & mobile are not competing parts of the industry or accounted for in this investigation because reasons. This just makes them look inept & just looking for a reason to slap big tech.
 

ermitron2

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I mean fair, but it still doesn't make sense.
It's complicated, opr maybe not according to Sony:

Microsoft argues that Nintendo has been successful without access to Call of Duty. This misses the point. The Decision identifies a wide body of evidence that Nintendo offers a differentiated experience to Xbox and PlayStation because it focuses on family-friendly games that are very different from PEGI 18 FPS games like Call of Duty. This is supported by Microsoft's internal documents, which, so the CMA found, show that: "In general, Microsoft's internal documents track PlayStation more closely than Nintendo, with Nintendo often being absent from any internal competitive assessment."


"Microsoft claims that Nintendo's differentiated model demonstrates that Sony does not need Call of Duty to compete effectively. But this reveals Microsoft's true strategy. Microsoft wants PlayStation to become like Nintendo, so that it would be a less close and less effective competitor to Xbox. Post-Transaction, Xbox would become the one-stop-shop for all the best-selling shooter franchises on console (Call of Duty, Halo, Gears of War, Doom, Overwatch), as the Decision explains, and it would then be free from serious competitive pressure."
 

meatbag

Tingle
This just makes them look inept & just looking for a reason to slap big tech.
This is what bothers. I'm honestly not against stopping big tech in their tracks, but the actual arguments being used in this case have been woefully illogical.

publisher acquisition diminishes the ability of independent developers to seek equitable publishing deals
Like, Terell says, not a single one of these regulators even mentioned this.

It just bothers me that regulators (due to the arguments they have presented) appear to be trying to help Sony continue to be market leader rather than emphasizing legitimate concerns about big tech and consolidation.
 

risnuff

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"Microsoft wants PlayStation to become like Nintendo."

Dominant sales-wise in one of gaming's largest markets (Japan), while still highly competitive worldwide featuring numerous instantly recognizable characters even to people who don't frequently play games? :unsure: In that case, never mind Microsoft, Sony should want PlayStation to become more like Nintendo. It's a ludicrous argument that falls apart at the slightest glance. There's been quite a bit of pretending throughout this whole process like Nintendo is in an entirely different business than Xbox and PlayStation or otherwise somehow "don't count."
 

jkm23

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I’d argue they look like clowns already for trotting out some of the arguments they have. We have regulators actually insisting that Nintendo, PC, & mobile are not competing parts of the industry or accounted for in this investigation because reasons. This just makes them look inept & just looking for a reason to slap big tech.
This take isn't wrong, I just feel like to over complicates it. My first reaction to Microsoft making this buyout was "Someone needs to say 'Request Denied' " ASAP. Anything that gets closer to that is good, of course barring any terrible precedent setting rulings.
 
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thoughthaver

Bob-omb
i hope biden goes dark brandon on these tech giants. break them the fuck up (not happening lol) or at least inconvenience them.
 
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Terrell

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I’d argue they look like clowns already for trotting out some of the arguments they have. We have regulators actually insisting that Nintendo, PC, & mobile are not competing parts of the industry or accounted for in this investigation because reasons. This just makes them look inept & just looking for a reason to slap big tech.
This is what bothers. I'm honestly not against stopping big tech in their tracks, but the actual arguments being used in this case have been woefully illogical.


Like, Terell says, not a single one of these regulators even mentioned this.

It just bothers me that regulators (due to the arguments they have presented) appear to be trying to help Sony continue to be market leader rather than emphasizing legitimate concerns about big tech and consolidation.
I understand why it's not being brought up, it's primarily because regulators aren't doing a whole lot of independent investigating on these matters off the hop, they're relying heavily on statements and opinions submitted to them and SIE has been the most vocal; many of these regulators aren't even receiving submissions from Nintendo in their first round, let alone the larger independent developers that this adversely effects the most. This is how you end up with regulators parroting some really bizarre talking points that sound vaguely like playing favourites with corporations in the first round of regulator scrutiny, because they hide the good investigators in the 2nd round.

It's my personal opinion that nothing presented thus far is likely to stop the deal, either because it's nonsense or because it's easily waved away with some entirely transient concessions. What's more important is teeing up a regulatory argument that actually has a chance to stick and/or puts a chilling effect on acquisitions moving forward, a demonstration that regulators understand the market they're regulating and are keeping an eye on it; diminished competition for publishing contracts would do that in my opinion. Wouldn't stop this deal from going through, but it would give big companies significant pause to any notion that this deal opens up a publisher acquisition frenzy, complete with reference material to point to if it's tried again. And honestly, that's what we should all be looking for here, some indication that regulators legitimately understand the needs of the industry from a holistic competitive standpoint, not just what matters to the largest and most vocal players within it. It's not enough to look tough on big tech if nothing substantive is achieved to curtail them.
 

meatbag

Tingle
And honestly, that's what we should all be looking for here, some indication that regulators legitimately understand the needs of the industry from a holistic competitive standpoint, not just what matters to the largest and most vocal players within it
Put it better than I ever have. It would be easier to get behind the regulators if I could actually trust them that they know what they're doing.
 

Supreme Overlord

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I’ve said it elsewhere and I’ll say it here: while SIE, MS and regulators have turned this into a slap fight over whether or not Activision Blizzard content - CoD in particular - is an essential input (it’s not), it misses a far more substantive argument to be made that a publisher acquisition diminishes the ability of independent developers to seek equitable publishing deals. And the fact that such a consideration isn’t being made by ANYONE makes the regulators look like clowns.
Interestingly, this is the argument that was put forth against the Penguin Random House / Simon & Schuster merger which has now fallen apart -- that such a consolidation would impair authors' bargaining power and ability to seek better deals for themselves.
 
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damondamon

Shriekbat
I'm very out of the loop about this case, but the more I read about it, the more I think this is what Nintendo back then/around the start of Mr. Iwata as the company's president envisioned when they changed their business model and started doing what they have been doing now. It's just such a simple thing to do: nurture your own games, build your own audience, and reap the profit.
 


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