FTC Files to Stop Microsoft Buying Blizzard | Elden Ring Wins Game of the Year

the gaming tap
AnchorWhat's on Tap This Week?
  • The FTC formally filed last week to block Microsoft's pending $69 billion purchase of Activision-Blizzard.
  • Which games won top honors at The 2022 Game Awards and what was announced?
  • Other News: Intel, Xbox & more

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Mergers & Acquisitions

Source: Activision Blizzard
Source: Activision Blizzard

FTC Files to Stop Microsoft Buying Blizzard It's a landmark development, but Microsoft still has several options

The FTC moved last Thursday to formally block Microsoft’s $69 billion acquisition of Activision Blizzard. This first of potentially many legal moves could dash hopes of Microsoft buying Blizzard. The brief, first-of-its-kind FTC argument also provides insights into how relatively ancient antitrust laws will be applied to future mergers and acquisitions.
“The Proposed Acquisition is reasonably likely to substantially lessen competition or tend to create a monopoly in multiple markets because it will create a combined firm with the ability and increased incentive to use its control of Activision titles to disadvantage Microsoft’s competitors. -FTC
The Case Against Microsoft
Translating the FTC’s legalese, the concern is that Microsoft buying Blizzard will allow Xbox to hamstring competitors in three key markets by withholding or degrading AAA games. The FTC cited Microsoft’s decision to make Bethesda titles like Starfield exclusives as evidence of this.
  • High-Performance Consoles: The FTC created a completely new market limited to the PlayStation and Xbox Series S & Series X
    • Nintendo’s Switch is excluded and considered a mobile gaming device
    • In the FTC’s eyes, Microsoft’s Call of Duty deal with Nintendo is moot
    • Gaming PCs are excluded "due to differences in price, hardware, performance, and functionality"
  • Multi-Game Content Library Subscription Services: More expansive game subscriptions such as Xbox Game Pass, PlayStation Plus Extra, or Ubisoft+
    • The FTC is excluding basic online subscriptions such as Xbox Live Gold or PlayStation Plus Essential
  • "Cloud Gaming Subscription Services": Xbox Cloud Gaming, PlayStation Now and the likes of the soon-to-be-departed Google Stadia
Microsoft’s Options
This opening from the FTC presents Microsoft with several outs, should an administrative judge find the FTC’s case persuasive. Microsoft’s  decisions, however, will be heavily influenced by the fast approaching June 2023 deadline and the financial pain both parties would suffer by missing it. 
  • Full Speed Ahead: Microsoft could bet on a judge tossing out the FTC’s complaint in its entirety
    • That the FTC’s filing is an anomaly after decades of lax regulation may give Microsoft confidence
  • Partial Acquisition: Microsoft buying Blizzard can still happen, but parts of Activision Blizzard would have to be spun off
    • If Microsoft is as serious as it claims to be about mobile gaming, this could mean acquiring King and letting legacy franchises like Call of Duty go
  • Having a Babysitter: Microsoft and Activision could complete the deal, but under the condition of no further acquisitions without prior notice
  • Pull the Plug: Microsoft could call off the deal to avoid a protracted and potentially unflattering ordeal
A Glimpse at A More Fractured Future
It can’t be understated how important the FTC’s decision is, not only for gaming but larger industries like tech. In particular, the FTC’s definition of "high-end consoles" as a distinct market could shape future regulation. Would regulators be able to build on it and narrow market definitions even further, for example, to just a certain console?
As graduates from the Phoenix Wright School of Law, we will also point out a few other key highlights:
  • Team Nintendo: If Nintendo can stomach the FTC’s less than flattering description of the company’s reliance on “appeal(s) to player nostalgia,” being placed in the mobile market gives it more latitude for future acquisitions in the US
  • Does Exclusivity Still Matter: The FTC makes no mention of cross-platform play, which could torpedo their argument that game exclusives drive console sales
  • Are PC’s Separate: While raising some good points about pricing and hardware, the FTC’s argument that PC’s are not part of the high-end console market due to “functionality” is shaky
  • Numbers Don’t Lie: The FTC’s claim that Microsoft would benefit from subscriptions and console sales by making games exclusives doesn’t seem to match reality
    • Consoles are sold at a loss, subscriber revenue has flagged, and the FTC ignores microtransaction revenue
  • A Peak Behind the Curtain: Many quotes and figures are redacted, which could mean juicy revelations down the road.

-Avery Bissett, Head Writer



Source: The Game Awards
Source: The Game Awards

Elden Ring Wins Game of the Year Also: Hades 2, Bioshock creator’s next game, Death Stranding 2 announced

Microsoft’s next big move appears likely to be serious investment into a mobile gaming platform. While not as flashy as the Metaverse, it’s a smart investment in line with its increased focus on platform-agnostic services.

The Plan
Microsoft, usually a step behind in the Asian market, is actively scouting Chinese developers for a title to serve as its response to Sony’s blockbuster Genshin Impact, according to Reuters. 

  • Genshin is a free-to-play RPG from Chinese dev MiHoYo
    • Almost $4 billion in microtransaction spending since Sept. 2020 launch
  • Sony was able to lock out Xbox through a deal with MiHoYo
    • Exclusive to PC, PS4, & PS5, with an upcoming Switch version
Microsoft wants to become a mobile player competing with the likes of Google or Apple, according to regulatory filings related to its pending purchase of Activision-Blizzard. Closing on Activision-Blizzard would bring into the fold experienced mobile studios and their mobile hits, such as Candy Crush and Call of Duty: Mobile.
  •  “Xbox will seek to scale the Xbox Store to mobile, attracting gamers to a new Xbox Mobile Platform”
  • ”Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new.”
Will It Work?
Game development is a fickle endeavor, and there is no guarantee that Microsoft will land a blockbuster mobile title like Genshin. But when it comes to what it can control, it 's making the right moves: acquiring the requisite studios and talent while pushing Xbox subscriptions and cloud gaming to every platform and user base possible.

-Avery Bissett, Head Writer


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Source: Twitchtracker.com, Twitch.tv
Source: Twitchtracker.com, Twitch.tv

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Source: Twitter
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The Tap: News to Go

  • Games: Call of Duty: Modern Warfare II has overtaken Elden Ring to become the best selling video game of 2022 (courtesy of Game Spot). As we wrote in our preview of the game, MWII seemed to makr a return to fiscal form for Activision.
  • Console: The Xbox Series S is receiving a $50 discount to $249 through Christmas Eve, its longest promotional window to date (courtesy of Video Game Chronicle). Microsoft's less powerful console usually is available for $299.
  • GPU: Intel considers 200W to 225W the sweet spot for GPUs, according to a recent interview with Intel graphics General Manager Raja Koduri (courtesy of Gadgets 360). Barring major leaps in power efficiency, this would suggest Intel's focus remains on midrange products competing with the likes of Nvidia's RTX 3060.
  • Media Streaming: Amazon officially announced it is ordering a Prime Video series for God of War.