Microsoft"s proposed $68.7 billion acquisition of Activision Blizzard has been an expectedly messy affair. Although the deal has been approved in some countries like Saudi Arabia and Brazil, it is facing hurdles in major markets like the EU and the U.S. It is being probed in the UK by the Competitions and Markets Authority (CMA) while the U.S. Federal Trade Commission has said flat out that it doesn"t want the deal to go through. Now, an independent group of gamers has also sued Microsoft because of the acquisition.
The lawsuit in question has been filed by 10 U.S. gamers, three of whom play exclusively on PlayStation consoles. It is important to note that this is not a class-action lawsuit and that it names only Microsoft as the defendant in the case, not Activision Blizzard.
The 45-page document argues that if the acquisition is allowed to proceed, it would have a lot of negative effects on the industry as a whole. These include reduced competition, higher prices, less creativity, decreased output, and Activision games being locked to Microsoft"s own platforms. Excerpts from the lawsuit have been quoted below:
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.
The plaintiffs have demanded that Microsoft and Activision"s acquisition contract should be declared null and void, and that they should be permanently restricted from going in this direction ever again. They have also required Microsoft to pay for the cost of the lawsuit, including a "reasonable" attorney"s fee. It remains to be seen if the lawsuit will hold up in court.
Source: Lawsuit document via Reuters, Bloomberg