Indies and unions rally behind Microsoft's Activision Blizzard deal

Nine amicus briefs have been filed in support of Microsoft's $68.7 billion merger with Activision Blizzard by a group including indie developers, venture capitalists, the CWA labor union, and former regulatory advisors.

As highlighted by The Verge senior editor Tom Warren on X, the briefs were submitted in response to the Federal Trade Commission's (FTC) attempts to appeal the loss of its high-profile court case against Microsoft and block the acquisition in the United States.

Notably, the briefs include pro-merger statements from five indie publishers and studios (collectively referred to as 'amici' in the filing) including Curve Digital, Finji, Studio Wildcard, iam8bit, and Strange Scaffold that suggest the deal will have a positive impact on the development community.

"Amici are five independent companies, of all shapes and sizes, that publish or develop video games for a range of game-streaming platforms, including Microsoft's Xbox Game Pass service on Xbox. Amici thus have first-hand experience with Microsoft's Game Pass subscription and its effects on the market for independently published and developed games," reads the brief. 

"And while the FTC argues that the merger will stifle competition, amici have had precisely the opposite experience with Microsoft's Game Pass service."

In contrast to the concerns of the FTC, those studios argue subscription services like Game Pass are "crucial" to the success of indie games, increasing the odds that players will discover lesser-known titles and lowering the cost for entry when they do.

"By lowering the barrier to trying new games, subscription services like Game Pass increase the odds that indie games can break through into a viable revenue-generating level of players and viewership," continues the brief.

Indies claim Xbox Game Pass offers cross-platform benefits

Those studios state that visibility for an indie game on one platform—that developers might enjoy after being featured on Game Pass—frequently translates to greater visibility and awareness on other platforms, increasing player counts and by extension revenue in the process.

"In these ways, Game Pass is actually an important mechanism for increasing competition in gaming, because it promotes a market where indie games [sic] can achieve and increase financial viability for their current and future games, across all platforms where they appear," states the brief.

Axios reporter Stephen Totilo noted the same brief states that Human Fall Flat (published by Curve Digital) attracted 14.2 million users through Game Pass alone, while Escape Academy (published by iam8bit) gained over 1.5 million users through the subscription service.

In another Amicus brief filed jointly by labor union the Communications Workers of America (CWA) and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the details of which were shared with Game Developer, both groups said the deal will ultimately enable more unionization within the games industry.

"Microsoft's binding agreement with CWA to allow Activision-Blizzard employees to freely organize unions effectively counters potential employer market power over workers," said a CMA spokesperson, referencing the legally enforceable labor neutrality agreement it signed with Microsoft in June 2022, which would allow Activision Blizzard workers to freely make a choice about union representation.

"The Labor Neutrality Agreement represents a groundbreaking and speedy path for employees at Activision to choose whether to form a union without fear of intimidation or retaliation," adds the brief. "The labor neutrality agreement between Microsoft and CWA [...] will benefit both the workers and the employer, and will offer a blueprint for labor relations in the industry. Microsoft has taken a positive, proactive approach to labor market issues here, and has done so in a meaningful, effective way."

Microsoft looking to complete Activision Blizzard deal in October 

The FTC has continuously argued the merger will substantially lesson competition in the game industry, enabling Microsoft to suppress rivals in the console, subscription service, and cloud-gaming markets.

Microsoft, however, made several commitments that will ensure major Activision Blizzard franchises like Call of Duty remain accessible on rival platforms operated by Nintendo, PlayStation, and Nvidia for the next decade, should the deal go through.

Those partnerships and pledges, many of which were announced before the FTC's case was heard in court, resulted in California judge Jacqueline Scott Corley ruling in favor of the Xbox maker.

When the ruling was announced back in July, Scott Corely said the FTC failed to show a "likelihood it will prevail on its claim this particular vertical merger [...] may substantially lessen competition."

"The record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore denied," they added.

Although the FTC is still attempting to mount a challenge against Microsoft, the Xbox maker now has a clear pathway to complete its Activision Blizzard purchase in United States.

Given the regulatory hurdles that impeded the merger in the U.S. and other regions like the UK, both Microsoft and Activision Blizzard agreed to extend their merger agreement deadline until October 18, 2023, to put the final pieces of the seismic deal into place.