In a significant development, the US Federal Trade Commission (FTC) has taken decisive action to temporarily halt Microsoft’s high-profile acquisition of gaming giant Activision Blizzard. The FTC’s move aims to prevent the deal from reaching fruition before the government’s antitrust case against the massive $69 billion merger is given a fair hearing.
The FTC’s filing emphasized that Microsoft and Activision had indicated their intention to conclude the deal as early as Friday, compelling the commission to urgently request a federal judge to block any final agreement before the clock strikes 11:59 p.m. ET on June 15.
Central to the FTC’s concerns is the potential fallout from the acquisition, which would mark Microsoft’s largest-ever deal and a watershed moment for the video game industry as a whole. The commission warned that such a merger could grant Microsoft unwarranted control over Activision’s content, ultimately diminishing competition within the market.
Furthermore, the FTC expressed apprehension about the impact on Activision’s operations and strategic plans. Of particular concern is the possibility that the combined entity would gain access to sensitive business information, which could be exploited by the software giant to further solidify its dominance.
This isn’t the first time the FTC has sought to block the transaction on antitrust grounds. Back in December, the commission initiated proceedings by appealing to an in-house administrative judge. The FTC argued that the acquisition would afford Microsoft’s Xbox exclusive access to Activision games, leaving major competitors like Nintendo and Sony’s PlayStation out in the cold.
While the European Union granted approval to the deal in May, British competition authorities rejected it in April, casting a shadow of uncertainty over the acquisition. Following the FTC’s announcement, Microsoft’s stock experienced a modest 1.5% increase, while Activision’s shares dipped by 0.8%.
Brad Smith, Microsoft’s President, welcomed the opportunity to present the company’s case in federal court, emphasizing the potential benefits the acquisition would bring to gamers and gaming companies. In a bid to address concerns, Microsoft even offered to enter into a legally binding consent decree, guaranteeing the provision of Activision’s highly popular “Call of Duty” games to rivals, including Sony, for a duration of ten years. The acquisition was initially announced in January 2022, with Microsoft expecting it to be finalized by the end of its 2023 fiscal year in June.
Highlighting the pressing nature of the matter, an FTC spokesperson stated that the request for a temporary restraining order was filed due to public reports suggesting an imminent closure of the deal. The FTC remains committed to conducting a thorough review and ensuring due process.
The legal battle that lies ahead reflects the Biden administration’s assertive stance on antitrust enforcement. However, legal experts caution that the FTC faces an uphill battle in convincing a judge to block the acquisition, given the voluntary concessions made by Microsoft to allay concerns of market domination.
A pivotal moment in this high-stakes saga will arrive on August 2 when the trial at the FTC’s in-house administrative court is scheduled to commence. The outcome of this legal showdown will have far-reaching implications for the future of the Microsoft-Activision merger and the broader dynamics of the gaming industry.
