Video gamers have sued Microsoft Corp in a bid to stop its acquisition of Activision Blizzard, alleging the $69 billion deal will thwart competition in the gaming industry.
The case was filed in a California court on Tuesday on behalf of 10 video gamers in California, New Mexico and New Jersey. They allege the deal will result in reduced consumer choice, raise prices and frustrate competition.
The $69 billion transaction would be Microsoft’s largest ever and the largest in the video gaming industry, giving the technology company control of video game franchises.
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There are concerns Microsoft will have means and motive to harm competition by manipulating Activision’s pricing, degrade game quality or player experience on rival consoles and gaming services. Additionally, Microsoft may change terms and timing access to Activision’s content which will harm consumers.
“As the game video industry continues to grow and evolve, it is critical that we protect the market from monopolistic mergers that will harm consumers in the long run,” said plaintiff’s attorney and top antitrust California lawyer Joseph Saveri in a statement in San Francisco.
Big business for video gamers
The gaming industry is now worth an estimated $300 billion with 2.9 billion active players worldwide. It is projected to continue growing.
Microsoft announced in January this year its ambitious plans to purchase the video gaming company for $69 billion.
Activision is one of the world’s top video game developers for multiple gadgets such as video consoles, personal computers and mobile devices.
It has produced some of the most popular game titles including Call of duty, World of Warcraft, Diablo and Overwatch with millions of active users monthly.
Microsoft has Xbox Game Pass, a leading game content subscription service.
Its Xbox Series S and Series X are one of only two types of high performance video game consoles.
Monopolistic tendencies
However, about two weeks ago, the United States Federal Trade Commission (FTC) filed a complaint to block the transaction alleging it would give Microsoft monopoly over gaming industry.
Holly Vedova, director of the FTC’s Bureau of Competition said: “Microsoft has already shown that it can and will withhold content from its gaming rivals.
“Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast growing gaming markets.”
According to FTC, Activision offers its games on multiple devices regardless of producer, but this could easily change if Microsoft was allowed to proceed with the transaction.
Following the FTC lawsuit, Microsoft president Brad Smith said: “We have complete confidence in our case and welcome the opportunity to present our case in court.”
The deal also faces antitrust scrutiny in the European Union.
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