On Friday, October 13th, 2023, Microsoft announced that it had closed its deal to acquire video game studio Activision-Blizzard for $69 million in line with US, UK, and UN regulations. Activision-Blizzard created some of the most iconic titles of all time including Call of Duty, Overwatch, and World of Warcraft, and the company announced that they generated $2.21 billion in net revenue in the quarter ending on June 30th, 2023. Before this deal, Microsoft was known as the creator of other giants within the video game canon including Halo, Forza, and Minecraft generating $15.47 billion in the fiscal year ending in June of 2023. Needless to say, this acquisition would only solidify the newly formed entity as a dominating force in the video game industry. 

In December of 2022, the FTC filed an antitrust lawsuit against Microsoft to stop the purchase, but the California District Court ruled in favor of Microsoft last July reasoning that the FTC did not show proof that the deal itself was anti-competitive. FTC hopes to extend the existing temporary restraining order preventing the final closure of the deal. FTC appealed the decision to the Ninth Circuit, arguing that the standard set by the California District Court is too high, and instead, the agency should only have to show that the deal provides Microsoft with anti-competition abilities coupled with the incentive to do so. Microsoft claims the FTC failed to show it has any incentive to withhold Call of Duty from competitors.  

However, many within the video game industry and enjoyers of video games alike are not convinced by Microsoft’s claim and strongly disfavor the potential rise of Microsoft to a “final boss” level of power within the industry. One of Microsoft’s most successful titles Elder Scrolls V: Skyrim, created by Bethesda–acquired by Microsoft in 2021, was recently announced to have crossed the threshold of 60 million copies since its release in 2011 making it the 8th best-selling game of all time. Skyrim was released for all platforms including the infamous rivals Microsoft’s Xbox and Sony’s PlayStation. However, Microsoft has announced that the long-awaited Elder Scrolls IV game will be an Xbox exclusive, preventing PlayStation owners from playing it. A precedent exists to suggest Microsoft will follow through on its word. For example, Starfield, a Bethesda original released in 2023, was released exclusively to Xbox consoles, and PlayStation players were excluded from enjoying the title. 

In Microsoft’s defense, the practice of platform-exclusive games is not new and has been utilized by many companies within the industry including Sony which made incredibly successful PlayStation-exclusive titles including Marvel’s Spider-Man and The Last of Us. Additionally, Nintendo is known for having many titles such as The Legend of Zelda and Mario Kart playable exclusively on Nintendo consoles. Unfortunately, the fear now rests on the idea that Microsoft will make all their titles, or at least their most intriguing ones, platform exclusives to entice people to switch from their current platforms to Xbox, essentially holding the video game industry hostage. 

The Ninth Circuit’s decision will greatly impact the future of the video game industry as Microsoft is on the cusp of controlling some of the most popular and influential titles in video game history with their eyes set on acquiring other video game developers including Nintendo. While Microsoft has entered into a binding agreement with Sony not to make Call of Duty an Xbox exclusive for the next decade, after that decade has passed, it would be out of the hands of the FTC, Sony, or any other entity to regulate if the deal is fully closed. Thus, the appeal will truly be a bellwether for anti-trust law and the ability for companies to position themselves to dominate industries including the video game industry.

Carson Sanford is a second-year law student at Wake Forest University School of Law. He holds a B.A. in Political Science and Philosophy from Emory University. 

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