Video game players sue Microsoft-Activision merger • The Register

First the FTC threw in a legal wrench, and now a group of gamers have filed a class action lawsuit in California to stop Microsoft from buying Activision Blizzard.

It seems Redmond just can’t take a break from its attempts to complete a $69 billion acquisition of the World of Warcraft maker, 10 players are claiming [PDF] would breach Section 7 of the Clayton Act, which prohibits mergers which would significantly affect competition.

Defendants argue that Microsoft and Activision Blizzard are significant competitors in the video game development, publishing and distribution markets and that the acquisition would adversely affect competition in the open market.

“The proposed acquisition could give Microsoft far outsized market power in the video game industry and enable Microsoft to foreclose competitors from critical inputs and important markets,” defendants said in the lawsuit.

The consolidation would make it the third-largest gaming company in the world, as Microsoft previously bought 24 different gaming studios, including Minecraft maker Mojang Studios, KotOR maker Obsidian Entertainment, and Hellblade maker Ninja Theory.

Activision Blizzard, according to the lawsuit, is itself a large conglomerate, formed through Activision’s purchase of WoW, Starcraft, and Overwatch maker Blizzard along with mobile game giant King, Call of Duty maker Raven Software, and others.

The lawsuit alleges the merger would reduce competition in a number of product markets, including PC, console and mobile games, which it defines as separate “relevant product markets.” The same applies to triple-A games, game subscription services, console hardware and “high performance” console systems.

All of these markets, the plaintiffs allege, could suffer as a result of the merger of Microsoft and Activision, and that suffering in turn could be transmitted to them, and someone really needs to think about the gamers.

The lawsuit alleges “higher prices, less innovation, less creativity, less consumer choice, reduced production and other potential anti-competitive effects, [would] depriving plaintiffs and the general public of the salutary benefits of competition.”

Of course, this also harms the industry

The lawsuit also alleges that employees in the video game industry would be harmed by the merger because Microsoft would also have “outsized market power in hiring and retaining video game employees, which requires specialized talent.”

Given the recent lawsuits Microsoft has faced over allegations of sexual harassment, and Activision Blizzard’s struggles with it, the lawsuit said the court should be concerned about giving companies with their history such hiring power. Not to mention tech companies colluding to cut wages and hire key workers.

This, of course, all depends on whether the FTC’s recent lawsuit to prevent the merger succeeds, or whether the European Union’s investigation into the merger makes sense to put a permanent end to it.

The actions of the FTC and the EU were both justified on antitrust grounds similar to those put forward by the Angry Gamers Group. Microsoft has predictably argued that the acquisition would give players more options, although it doesn’t appear to have had a major impact on the FTC.

The agency filed its lawsuit to block the merger shortly after Microsoft President Brad Smith issued a comment The Wall Street Journal, in which he ominously said blocking the acquisition “would be a huge mistake.” ® Video game players sue Microsoft-Activision merger • The Register

Rick Schindler

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