When Microsoft announced it would acquire Activision Blizzard for $68.7bn, the company probably knew it would face plenty of pushback. Sony's negativity was obvious, while regulatory pushback was also expected. However, Microsoft is now facing a lawsuit from an independent group of gamers over the deal.
The group of 10 gamers are from the United States, and three of them play PlayStation consoles exclusively. Microsoft is the only defendant in the suit and not Activision Blizzard, which is also not a class action.
Lawsuit
In the filing, the accusers suggest if Microsoft purchases Activision Blizzard there will be a negative impact on the industry. For example, competition and high prices, while the group also believes creativity will be slowed:
“The proposed acquisition of Activision Blizzard by Microsoft poses a substantial threat to the Plaintiffs, and to the public at large, in that the proposed acquisition may substantially lessen competition in each of the relevant product markets, and may cause loss to the Plaintiffs, and the public at large, in the form of higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects, which deprive the Plaintiffs, and the public at large, of the salutary benefits of competition. The proposed acquisition of Activision Blizzard by Microsoft may also substantially reduce competition in the labor market for video game labor talent.
Employees in the video game industry may have substantially less choice among employers, and Microsoft may have outsized market power in hiring and retaining employees in the video gaming field, which requires specialized talent. […] Concentration in the market may further limit employees' negotiating power and ability to change employers for improved working environments and compensation.
Activision Blizzard is one of Microsoft's primary competitors for top talent in the gaming content industry. The proposed acquisition of Activision Blizzard by Microsoft may reduce the competition for talent in this field. The merger of Microsoft and Activision Blizzard will irreparably harm competition because Microsoft is acquiring, and thereby eliminating one of only a few significant rivals of gaming content creation. The current and future competition between Microsoft and Activision Blizzard will be irretrievably lost. If Microsoft's acquisition of Activision Blizzard is allowed to commence, Microsoft may have far-outsized market power in several key gaming markets, including the labor market, which will allow Microsoft to further inhibit competition.”
Microsoft's Struggles
Microsoft's proposed $69 billion acquisition of Activision Blizzard has faced plenty of obstacles, most notably from regulators and Sony.
Sony's contention to the deal rests on Microsoft taking control of major franchises – most notably Call of Duty but also Warcraft and Candy Crush – and making them exclusive to Xbox Game Pass. This concern is shared by regulators such as the CMA, European Commission, and the FTC in the United States.
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Last Updated on June 4, 2023 1:15 pm CEST by Markus Kasanmascheff
