If the FTC successfully blocks Microsoft’s acquisition of Activision Blizzard, it may spell doom for the IT company’s metaverse goals.
On Thursday, December 8th, the Federal Trade Commission announced that it would sue to block tech giant Microsoft from completing an acquisition of Activision Blizzard, the video game developers behind the Overwatch and Call of Duty franchises. According to the Commission, if the deal is successful, it would give Microsoft an unfair advantage over other players in the video gaming sector and effectively create a near monopolistic industry.
In January 2022, Microsoft announced the $68.7 billion planned acquisition, which according to the FTC, is the biggest ever in the history of the video gaming industry. In a statement, Holly Vedova, Director of the FTC’s Bureau of Competition, expressed concern over Microsoft’s position and what the deal’s success means for video gaming.
Vedova believes that Microsoft has already shown that it can and would withhold content from its rivals, harming competition across multiple fast-growing gaming markets worldwide. If the suit is successful, it will leave a significant dent in Microsoft’s metaverse ambitions, as the acquisition is part of the company’s plans to lead the future of the internet and become a stakeholder in the emerging virtual economy.
Already, Microsoft has taken significant steps towards actualizing its metaverse ambitions, one of which involved joining Meta, Sony, and other rivals to create an Open Metaverse. Microsoft has also joined The Metaverse Standards Forum, a group formed to encourage collaboration and cooperation between companies looking to build the internet’s next iteration.
To support the suit, the FTC cited Microsoft’s acquisition of Bethesda Games Studios, the studios behind the Fallout and Elder Scrolls franchise, and how the company made its Starfield and Redfall games exclusive to its flagship Xbox console.
Blockchain developers have also lent their voices to the discussion, expressing concern over the moves from companies like Meta and Microsoft. They claim that these tech giants are intent on dominating the next iteration of the internet and are building closed systems, from which Meta has distanced itself. They also shared concerns over the lack of custody that Web2 metaverse offerings will have, as gamers will not have full ownership of their in-game assets in such metaverse environments.
Although Microsoft is entering the metaverse, the company has shown no desire to allow Web3 products like NFTs into its virtual worlds. Notably, in July 2022, the company banned NFTs from all its game servers, including Minecraft, claiming the move was to ensure that players enjoy a safe and inclusive experience.
According to the FTC, the successful acquisition of Activision Blizzard will give Microsoft the means to hurt its competition through price manipulations, superior player experience, and game quality. However, it appears the leadership of Activision Blizzard is not in support of the suit, believing that Microsoft will not make its games Xbox exclusive nor develop closed metaverse systems. With executives at both companies insisting on going through with the deal, it remains to be seen if the FTC’s lawsuit holds any water.