Microsoft Settles Antitrust Lawsuit Over Activision Blizzard Acquisition

Microsoft has reached a settlement in an antitrust lawsuit brought by a group of gamers who challenged the tech giant’s $69 billion acquisition of Activision Blizzard. According to Hollywood Reporter, the two sides informed the court on Monday of their agreement to dismiss the case “with prejudice,” effectively ensuring the lawsuit cannot be refiled. While the specific terms of the settlement remain undisclosed, both parties agreed to bear their own legal fees and costs.

The lawsuit, originally filed in 2022 by gamers from several states, argued that the merger would create one of the largest video game companies in the world, raising concerns that Microsoft would use its market power to increase prices, limit output, and stifle competition. According to the complaint, one of the key fears was that Microsoft could make popular game titles exclusive to its Xbox console, restricting consumer choice. The lawsuit was filed shortly after the Federal Trade Commission (FTC) moved to block the deal.

However, the FTC’s case faced significant hurdles. U.S. District Judge Jacqueline Scott Corley denied the FTC’s request for a preliminary injunction, finding that Microsoft’s acquisition of Activision would not significantly reduce competition in key markets such as video game library subscriptions and cloud gaming. Per Hollywood Reporter, Judge Corley pointed to evidence suggesting that consumers might actually benefit from more access to Activision titles under Microsoft’s ownership. Additionally, she noted that gamers could still seek legal recourse after the merger if they believed it harmed competition.

Despite the FTC’s setback, the gamers behind the lawsuit persisted, urging the court to set a trial date following a ruling from the 9th U.S. Circuit Court of Appeals. They continued to push for a court order forcing Microsoft to divest from Activision, claiming that the newly merged entity was already harming consumers. The gamers argued that Microsoft had started canceling premium titles, raising prices and reducing development capabilities. They also raised concerns over Microsoft’s rapid growth in its Game Pass subscription service, which they said was trending towards monopolistic dominance in the market.

Read more: Court Ruling Opens Door for Microsoft to Sell Xbox Games on Android Without Google’s Cut

The gamers’ legal team, led by attorney Joseph Saveri, argued that Microsoft’s acquisition strategy was designed to capitalize on “network effects,” where platforms that grow faster gain competitive advantages due to their larger user bases. As Saveri pointed out, internal Microsoft documents revealed that the company believed “the first to scale wins” when it comes to content subscriptions. Since the merger, Game Pass subscribers have surged from 25 million in 2022 to over 35 million, according to court filings. The gamers argued this rapid growth was evidence of Microsoft’s increasing market power, warning that it could lead to fewer choices and higher prices for consumers.

Microsoft, however, has disputed these claims. According to Hollywood Reporter, the company has pushed back on the characterization of CEO Satya Nadella’s testimony. In particular, Microsoft argued that Nadella’s comments about “network effects” were taken out of context, and that the company does not dominate all sectors of the gaming market. It also dismissed the relevance of Game Pass subscriber growth, calling it a “meaningless apples-to-oranges comparison” that didn’t address the core issues raised by the lawsuit.

The settlement marks the end of a protracted legal battle that had been closely watched by the gaming industry. Last year, Microsoft finalized its acquisition of Activision after facing intense scrutiny from regulators in several regions. The deal brought together Microsoft, which owns the Xbox console and the widely used Windows operating system, with Activision Blizzard, the creator of hit franchises such as Call of Duty, World of Warcraft, and Candy Crush. Despite the controversy, Microsoft has argued that the merger will benefit gamers by bringing more content to its platforms.

Source: Hollywood Reporter