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As was was expected, the US Federal Trade Commission has now voted and filed a suit to block Microsoft's $69 billion acquisition of Activision Blizzard, saying the deal would harm competition. As reported by Bloomberg, the commission voted 3-1 on the matter and already filed the suit. The proceedings usually take from several months to a year to resolve, and here's what Holly Vedova, Director of the FTC’s Bureau of Competition had to say:
Microsoft has already shown that it can and will withhold content from its gaming rivals. Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets. Microsoft has been trying to address the exclusivity issues recently, offering 10 year Call of Duty availability deals to Steam, Nintendo and Sony, to assuage their concerns about Activision Blizzard titles becoming available on Microsoft platforms only, as the main focal point of the exclusivity discussion has been Activision's premiere FPS franchise.
This also isn't the only legislative opposition the merger faces, as both UK and EU organizations and legislative bodies are in the process of evaluating whether the deal can be approved. When it comes to the FTC, since Lina Khan was appointed to lead the agency in 2021, it has successfully blocked mergers between Lockheed Martin and Aerojet Rocketdyne Holdings as well as Nvidia ’s attempt to buy ARM.
Here's the full press release from the FTC:
FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc.
Agency alleges that maker of Xbox would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content December 8, 2022 The Federal Trade Commission is seeking to block technology giant Microsoft Corp. from acquiring leading video game developer Activision Blizzard, Inc. and its blockbuster gaming franchises such as Call of Duty, alleging that the $69 billion deal, Microsoft’s largest ever and the largest ever in the video gaming industry, would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.
In a complaint issued today, the FTC pointed to Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, Director of the FTC’s Bureau of Competition. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Microsoft’s Xbox Series S and Series X are one of only two types of high performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint.
Activision is one of only a very small number of top video game developers in the world that create and publish high-quality video games for multiple devices, including video game consoles, PCs, and mobile devices. It produces some of the most iconic and popular video game titles, including Call of Duty, World of Warcraft, Diablo, and Overwatch, and has a combined 154 million monthly active users around the world, according to the FTC’s complaint. Activision currently has a strategy of offering its games on many devices regardless of producer.
But that could change if the deal is allowed to proceed. With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.
The Commission vote to issue the complaint was 3-1, with Commissioner Christine S. Wilson voting no. A copy of the administrative complaint will be available shortly.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. For the latest news and resources, follow the FTC on social media, subscribe to press releases and read our blog.
US Federal Trade Commission "Likely to File Antitrust Lawsuit" to Block Microsoft Acquisition of Activision BlizzardBy Starym
Here's some potentially bad news for the sale of Activision Blizzard to Microsoft, as Politico is reporting that it is likely the US FTC will be filing a lawsuit to stop the acquisition - based on three sources "familiar with the matter". A lawsuit could postpone the deal's timing and even endanger it altogether, regardless of its result.
The acquisition deal has seen a lot of pressure and antitrust probes coming from many sides (including several other countries' regulating bodies and watchdog organizations), as it could constitute an unfair boost for Microsoft's side. The most vocal voice against the sale is Microsoft's chief console competitor, Sony, who argues that the sale would open the door to making many Activision Blizzard games (mostly focusing on Call of Duty) exclusive to Microsoft platforms. This, Sony argues, would significantly disadvantage Sony platforms and leave consumers with less choices for gaming.
A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, two of the people said. However, the FTC staff reviewing the deal are skeptical of the companies’ arguments, those people said.
The investigation remains ongoing, but much of the heavy lifting is completed, including depositions of Microsoft chief executive Satya Nadella and Activision head Bobby Kotick, the people with knowledge of the investigation said. If the agency does move ahead with a case, it could come as soon as next month, said the people, all of whom were granted anonymity to discuss a confidential matter.
- Politico's Josh Sisco
Well known gaming industry journalist Jason Schreier also weighed in on the story as well:
You can read the full Politico article here, as it goes in to detail about both Microsoft and Sony's arguments so far, as well as Google and Epic's involvement.
A pretty big bombshell was dropped a couple of days ago, as Blizzard announced the end of their partnership with NetEase and a possible end of their games being available in China. We've seen the official posts and responses, but there's a lot of context missing there. Luckily for us, however, well known Chinese WoW community figure NasDa has jumped in to explain things and add some new information and even rumors.
There's actually quite a few new elements presented below, from a rumor of an (unlikely) potential new partner for Blizzard, an explanation on how exactly publishing and certification work in China and how long it takes, the potential Microsoft involvement, the fact that the last time Blizzard did something like this China got WotLK almost a year later, and more.
The below is from a TwitLonger by NasDa:
All the base knowlegde you need to know about this Blizzard-NetEase CATASTROPHE.
- Foreign game companies must work with a domestic game publisher who will operate the game in China. That's why you never see CN region on Blizzard's map when a new patch is about to hit the live servers. CN region is basically in another "parallel universe". It's like peeing in a dark rainy night, you know it's definitely there, but you can't really tell where.
- The publishing partner for Microsoft in China is NetEase, ironically.
- Chinese law requires all digital games to receive a license from the regulator to be published in China.
- In the past getting a game license is not an issue. Since last year it's been extremely difficult for any game, domestic or foreign, to receive a license, even more so for the latter. Last time a foreign title received a lisence was over 500 days ago. Popular ones like PUBG, Fortnite, Apex and Valorant still don't have their Chinese publishing licenses yet. All Tencent games.
- China has resumed issuing new game licenses since April, for dometic games.
- Changing a publishing partnership means re-applying for game licenses even if the games are already approved by the regulator and it could take months or even years.
- This is the second time Blizzard changes their Chinese publishing partner. 14 years ago, Blizzard ended the partnership with their first partner, The 9, and then started worked with NetEase. Combining the process of re-applying for new game license for TBC expansion due to changing the partnership from The 9 to NetEase and the difficulty of getting a game license for WotLK expansion, the original Burning Crusade exapanion in CN region lasted for a total of 1090 days. Chinese players were forced to play LK pre-patch for 19 months. Imaging playing TBC for 3 whole years.
NetEase launched WotLK expansion in CN region on 31/08/2010. Just giving you an idea of how late that was. Paragon killed Arthas on 26th of March 2010. LOL. This is one of the reasons why LK classics is so popular in China.
Now you can see why Blizz and NetEase's "divorce" is widely considered to be a BLOODY CATASTROPHE by the Chinese community.
- Potenital buyer or interesting parties:
miHoYo, the developer of Genshin Impact, has denies the rumors of licensing deal with Blizzard;
Tencent replied that there was no relevant news internally for the time being;
Perfect world is another hot candidate according to rumors;
My source told me(and it's a good source), ByteDance, the parent company of Tiktok will be the successor or at least in the lead.
"Does ByteDance have any experience of operating a game before?" Ye, that was my first question but I guess time will tell.
- NetEase has promised that they will be issuing refund for all the players that still have remaining blizzard bucks and active game time in their accounts.
- After 24th of Jan. all Blizzard services in China will be shutting down. I still don't know what to do after that and where to play wow yet.
Thanks a lot to NasDa for all this information and I really do hope something can be done before January 23rd, as I cannot even imagine simply losing your entire WoW account, not to mention other Blizzard games - even temporarily, and especially with the potential of it being permanently gone. There are so many Chinese players who are part of the WoW community it would truly be a tragedy to see them lose everything they worked, a decade+ of time invested into the game could simply disappear.
Update: there's now also a very interesting comment from the NetEase Global Investment and Partnership President, which you can find at the bottom of the article.
We now also have two NetEase messages to their Blizzard game players, detailing exactly what will happen on January 24th, when their license ends, from the Battle.net client being shut down, to support of new releases before that date, what will happen to character data and more.
Thanks to Neo once again for translating the below statement.
To all of you, dear Blizzard gamers.
Thank you for your continued support and love of Blizzard products. We are honored to have worked with you for 14 years to create and share an unforgettable gaming experience, and once again, we thank you most sincerely!
Due to the expiration of our agreement with Blizzard Entertainment, World of Warcraft, Hearthstone Legend, Overwatch Return, Diablo III, StarCraft II, Warcraft III: Remastered, Heroes of the Storm (collectively referred to as "Blizzard products"), which are operated by Shanghai NetEase Network Technology Development Co, will terminate operation at 0:00 on January 24, 2023, and we hereby notify you of the following matters related to the termination of operation in mainland China.
November 23, 2022 onwards, we will close Blizzard game products in Battle.net and the client paid service and user registration portal.
During the period from November 23, 2022 to January 23, 2023, the servers of Blizzard game products will be open normally, and the content update of World of Warcraft "Dragonflight", Hearthstone Legend "The March Of The Lich King" and "Overwatch Return Season 2" will be available as usual, and users can continue to log in and experience the game content. At the same time, users will still be able to spend their Battle.net points and virtual currency on their accounts.
From 0:00 on January 24, 2023, the operation of Blizzard game products will be officially stopped, Battle.net login and all game servers will be closed, as well as the client download.
After the game servers are closed, all account data and character data in each game (including but not limited to character data, remaining game time, each game's items, materials, subscription and paid information, etc.) will be sealed. We will properly handle the game data in accordance with the requirements of laws and regulations to protect the legitimate rights and interests of users. For players who have paid but not used all online game virtual currency and paid game time (if any) that has not yet expired, we will start to arrange refunds after Blizzard game products cease operation.
Dear Blizzard gamers:
Due to the expiration of Activision Blizzard's license agreement with NetEase on January 23, 2023, Blizzard will discontinue most of its game services in mainland China (including World of Warcraft, Hearthstone Legend, Overwatch Returned, Diablo III, StarCraft II, Heroes of the Storm) starting January 24 at 00:00, based on contractual restrictions, while Diablo: Immortal's service will not be affected.
NetEase and Blizzard first partnered in 2008. Over the past 14 years, we have introduced Blizzard's high-quality games to China step by step, starting with World of Warcraft, and even synchronizing global release. With each introduction of a new game, we were excited, because these games also carry our passion and youth.
Within NetEase, there are also several thousand hard-core fans of Blizzard games. Therefore, we are more empathetic to the feelings of players at this moment. Before today, we had been doing our best and negotiating with Blizzard in good faith to seek continued cooperation in mainland China. However, after long negotiations, we were still unable to reach agreement with Activision Blizzard on some key terms of cooperation. Unfortunately, Activision Blizzard has announced earlier today that they are ceasing its cooperation and we will have to accept this decision. After January 23, 2023, NetEase will lose its distributorship and will no longer be able to continue to manage and operate these games that have carried players' memories for 14 years.
Next, NetEase Games will do its best to fulfill its responsibilities and serve players until the last moment. We promise that we will do our best to negotiate with Activision Blizzard to protect the interests of Chinese players to the greatest extent possible for the issues related to refunds, game data, virtual property, game rights, etc. that everyone is concerned about.
At the same time, we will work with Activision Blizzard to achieve "business to business, game to game", pay attention to the voice of players, value all that players who have paid for the game, and properly protect everyone's game assets and memories. We will continue to inform players of the progress of the work through official channels such as the "Blizzard Game Service Center". Once again, we thank all players for their understanding and support. If possible, we hope that Blizzard's departure is only temporary. After the shutdown, we will continue to hold on in our own way and not give up lightly. We believe that those who meet can meet again.
It seems there may have indeed been some behind-the-scenes drama, as NetEase Global Investment and Partnership President Simon Zhu talked about his own characters and a certain "jerk" that caused or affected this outcome, over on his LinkedIn.
Update: NetEase have now issued statements to their players, explaining what exactly will be happening in the next months and after the license expires.
Blizzard have announced that they will be suspending "most Blizzard game services in mainland China", as they did not renew their licensing agreement with NetEase. This includes World of Warcraft, Hearthstone, Warcraft III: Reforged, Overwatch, the StarCraft series, Diablo III, and Heroes of the Storm.
Originally spotted by chaud on MMO Champion.
Chinese Publishing (Source)
Certain games will no longer be available at end of license with NetEase on January 23, 2023
IRVINE, Calif.--(BUSINESS WIRE)--Nov. 16, 2022-- Blizzard Entertainment, Inc. announced today that it will be suspending most Blizzard game services in mainland China due to the expiration of the current licensing agreements with NetEase, Inc. on January 23, 2023. This includes World of Warcraft®, Hearthstone®, Warcraft® III: Reforged, Overwatch®, the StarCraft® series, Diablo III®, and Heroes of the Storm®. Diablo Immortal® co-development and publishing is covered under a separate agreement between the two companies.
Blizzard Entertainment has had licensing agreements with NetEase since 2008, covering the publication of these Blizzard titles in China. The two parties have not reached a deal to renew the agreements that is consistent with Blizzard’s operating principles and commitments to players and employees, and the agreements are set to expire in January 2023.
We will suspend new sales in the coming days and Chinese players will be receiving details of how this will work soon. Upcoming releases for World of Warcraft: Dragonflight, Hearthstone: March of the Lich King, and season 2 of Overwatch 2 will proceed later this year.
“We’re immensely grateful for the passion our Chinese community has shown throughout the nearly 20 years we’ve been bringing our games to China through NetEase and other partners,” said Mike Ybarra, president, Blizzard Entertainment. “Their enthusiasm and creativity inspire us, and we are looking for alternatives to bring our games back to players in the future.”
About Blizzard Entertainment, Inc.
Best known for iconic video game universes including Warcraft®, Overwatch®, Diablo®, and StarCraft®, Blizzard Entertainment, Inc. (www.blizzard.com), a division of Activision Blizzard (NASDAQ: ATVI), is a premier developer and publisher of entertainment experiences. Blizzard Entertainment has created some of the industry’s most critically acclaimed and genre-defining games over the last 30 years, with a track record that includes multiple Game of the Year awards. Blizzard Entertainment engages tens of millions of players around the world with titles available on PC via Battle.net®, Xbox, PlayStation, Nintendo Switch, iOS, and Android.
Cautionary Note Regarding Forward-looking Statements: The statements contained herein that are not historical facts are forward-looking statements including, but not limited to statements of our plans and objectives, including those related to releases of products or services. Activision Blizzard, Inc. generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,” “may,” “might,” “expects,” “intends,” “seeks,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management’s current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.
We caution that a number of important factors, many of which are beyond our control, could cause our actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: the expected effect of the expiration of the agreement with NetEase, Inc.; the effect of the announcement or pendency of the proposed transaction with Microsoft Corporation (“Microsoft”) on our business relationships, operating results, and business generally; risks that the proposed transaction with Microsoft disrupts our current plans and operations and potential difficulties in employee retention as a result of the proposed transaction with Microsoft; the global impact of the ongoing COVID-19 pandemic and other macroeconomic factors (including, without limitation, the potential for significant short- and long-term global unemployment and economic weakness and a resulting impact on global discretionary spending; potential strain on the retailers, distributors, and manufacturers who sell our physical products to customers and the platform providers on whose networks and consoles certain of our games are available; effects on our ability to release our content in a timely manner and with effective quality control; effects on our ability to prevent cyber-security incidents while our workforce is dispersed; effects on the operations of our professional esports leagues; and macroeconomic impacts arising from the long duration of the COVID-19 pandemic, including labor shortages and supply chain disruptions); our ability to consistently deliver popular, high-quality titles in a timely manner, which has been made more difficult as a result of the COVID-19 pandemic; our ability to attract, retain, and motivate skilled personnel; risks and uncertainties of conducting business outside the United States (the “U.S.”), including the need for regulatory approval to operate; risks relating to behavior of our distributors, retailers, development, and licensing partners, or other affiliated third parties that may harm our brands or business operations; our reliance on tools and technologies owned by third parties; outages, disruptions or degradations in our services, products, and/or technological infrastructure; data breaches, fraudulent activity, and other cybersecurity risks; increasing regulation in key territories; regulation relating to the Internet, including potential harm from laws impacting “net neutrality;” regulation concerning data privacy, including China’s Personal Information Protection Law; insolvency or business failure of any of our business partners, which has been magnified as a result of the COVID-19 pandemic; and the other factors included in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission.
The forward-looking statements contained herein are based on information available to Activision Blizzard, Inc. as of the date of this filing, and we assume no obligation to update any such forward-looking statements. Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained herein primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and may cause actual results to differ materially from current expectations.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221116006090/en/
Source: Blizzard Entertainment, Inc.