FTC moves to block Microsoft’s purchase of Activision

Posted on Sunday, Dec 18, 2022 by Ned Bellavance

Featured in this episode of Chaos Lever

I’ll start by saying that I do not have a dog in this fight. Activision makes AAA titles and casual games that I simply do not play or care about. The argument from the FTC is that the acquisition would, “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.”

Based on the biggest titles from Activision, I find that contention extremely tenuous. Activision produces multi-platform games like Starcraft, World of Warcraft, Diablo, and Call of Duty. There is no way Microsoft makes any of these titles an Xbox exclusive in the near future. They would be sacrificing billions in revenue and causing irreparable damage to their reputation in the gaming community by making such a move. Maybe they don’t care about their reputation - Microsoft has done some incredibly shitty things in the past - but they sure as hell care about the lost revenue.

Spending $69B on Activision means they intend to make that money back, and going for exclusive titles only cuts out vast swaths of the gaming market. This is not a traditional monopoly situation where there is only one console in the world and Microsoft runs it, there’s Playstation, Steam, Nintendo, Mobile games, PC games, and more! Will Microsoft launch some new exclusives on their Xbox console from Activision? Almost assuredly. Will they give up the revenue earned by releasing on other platforms? Certainly not.

I expect that this merger will eventually go through after the FTC does a fair bit of digging around. Probably the best part will be any legal discovery against Activision, which doesn’t exactly have a sterling reputation. If you’d like an extended deep dive on the matter, check out Ben Thompson’s post on Stratechery.