The Federal Trade Commission opposes the acquisition citing antitrust concerns, given its status as the largest-ever deal in the video game industry
On Monday, the Federal Trade Commission (FTC) lodged a court petition seeking a temporary pause on Microsoft’s purchase of Activision Blizzard. The FTC seeks to delay the closure of the deal until the government’s case against the $69 billion acquisition is addressed. Microsoft and Activision had suggested that the deal could be concluded by Friday, prompting the FTC to request a federal judge’s intervention to prevent any final agreement before 11:59 pm ET on June 15th.
As per the FTC, the envisioned agreement between Microsoft and Activision, marking Microsoft’s most extensive and the largest in the history of the video game industry, might empower and incentivize Microsoft to restrict or diminish Activision’s content, potentially diminishing competition.
The FTC voiced apprehensions that without judicial intervention, the merged entity could enact substantial alterations to Activision’s operations and business strategies. Additionally, concerns were raised by the FTC regarding the possibility of Microsoft obtaining access to confidential business data.
In December, the Federal Trade Commission (FTC), tasked with enforcing antitrust laws, had previously petitioned an administrative judge to obstruct the transaction on antitrust grounds. The core argument revolved around the possibility of Microsoft’s Xbox obtaining exclusive rights to Activision games, potentially placing Nintendo consoles and Sony’s PlayStation at a competitive disadvantage.
In May, the European Union granted approval for Microsoft’s $69 billion bid to acquire the company behind Call of Duty. However, British competition authorities thwarted the takeover in April.
On Monday, Microsoft’s shares experienced a 1.5% increase, while Activision’s shares declined by 0.8%.
Microsoft has conveyed that the acquisition would yield advantages for both gamers and gaming entities. To alleviate concerns, Microsoft proposed entering a legally binding consent decree with the FTC, pledging to supply Call of Duty games to competitors, including Sony, for a decade. The initial announcement in January 2022 indicated Microsoft’s anticipation of completing the deal within its fiscal year 2023, concluding in June.
In response to reports hinting at an imminent deal closure, the FTC has submitted a request for a temporary restraining order to impede the finalization while the review is ongoing.
This case illustrates the proactive stance on antitrust enforcement adopted by the Biden administration. Nonetheless, antitrust law experts indicate that the FTC might encounter difficulties in persuading a judge to halt the deal, given the voluntary concessions Microsoft has made to address worries about potential dominance in the gaming market.