Microsoft has settled an antitrust lawsuit brought by gamers challenging the tech giant’s $69 billion acquisition of Activision Blizzard.
The two sides on Monday notified the court of a deal to dismiss the lawsuit “with prejudice,” meaning it can’t be refiled. Terms of the agreement weren’t disclosed. “Each party shall bear their own costs and fees,” agreed the lawyers in a court filing.
The lawsuit, filed in California federal court in 2022 by gamers across multiple states, stressed that the merger will create among the largest video game companies in the world, with the ability to raise prices, limit output and reduce consumer choice. One example cited in the complaint was the possibility that Microsoft makes certain titles exclusive to Xbox. It was filed less than two weeks after the Federal Trade Commission sued to block the deal.
That case fell apart when U.S. District Judge Jacqueline Scott Corley denied the FTC’s bid for a preliminary injunction, finding that Microsoft’s ownership of Activision won’t suppress competition in the video game library subscription and cloud gaming markets. She noted evidence indicating more access by consumers to popular Activision titles. Corley also found in this case that a court order temporarily blocking the deal isn’t warranted because gamers could seek divestiture after the merger is consummated. Appeals followed.
The gamers urged the court to immediately set a trial data after the 9th U.S. Circuit Court of Appeals issues a ruling. Continuing to seek a ruling from the court ordering Microsoft to divest from Activision, they argued that the newly-merged company is harming them by cancelling premium titles and raising prices. Additionally, it claimed that Microsoft is undermining competition by, among other things, firing a significant number of Activision employees and rapidly increasing its Game Pass subscriber base.
Microsoft chief executive Satya Nadella recently testified that there are so-called “network effects” — the idea that the value of a product increases as more people use it — ensuring that platforms that grow to scale first have significant competitive advantages over smaller competitors because they receive more content from third-party developers, according to lawyers for the gamers. Internal company documents stated that “the first to scale wins” when it comes to content subscriptions. After the merger was completed, Game Pass grew from roughly 25 million subscribers in 2022 to over 35 million.
“As time passes, Microsoft continues to increase its market power, prices have increased, games continue to be cancelled, development capacities continue to diminish, and Game Pass continues to trend towards a monopoly,” wrote Joseph Saveri, a lawyer for the gamers who also represents artists and authors in class actions against AI firms, in a court filling.
Microsoft has disputed the gamers’ characterization of Nadella’s deposition, in which he allegedly said that the company isn’t a dominant player in certain gaming markets. It’s also argued that the Game Pass subscriber growth metric is a “meaningless apples-to-oranges comparison” irrelevant to the heart of the case.
Last year, Microsoft closed the merger after extensive battles with regulators in the multiple regions. The deal married Microsoft, which owns the Xbox console, a game streaming service and the most popular personal computing operating system in the world, and Activision, maker of Call of Duty, Warcraft and Candy Crush. The company didn’t immediately respond to a request for comment.