FTC files a request to forbid Microsoft Activision as deadline approaches

The FTC expressed concern that if Microsoft is permitted to acquire Activision, Microsoft will be able to withhold or degrade Activision’s gaming goods through pricing, game quality, experience on rivals’ offers, or withholding content from competitors entirely.

In other words, the FTC is concerned that Microsoft may prevent popular games from Activision Blizzard’s catalog from being released on rival gaming systems, such as those marketed by Sony. It might even charge more for titles that are released on rival systems.

While Call of Duty is currently available across platforms and Microsoft has promised to continue selling that series of games broadly, regulators are concerned that Microsoft may have the capability to hold those or analogously popular future labels for Xbox, stripping buyers away from Sony as well as other console makers.

The FTC stated that allowing the parties to merge before the matter went through an administrative hearing would make re-establishing the status quo difficult, if not impossible.

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The plea for an injunction comes as the deal’s deadline approaches. Both the FTC’s hearing date and an appeal to the Competition and Markets Authority’s decision to prohibit the acquisition occurred after the parties’ deadline of July 18. Meanwhile, the deal had been approved by European Commission officials.

According to the FTC, a preliminary injunction was required because Microsoft and Activision have represented that they may consummate the Proposed Acquisition at any time.

Microsoft announced its intention to purchase Activision Blizzard for $68.7 billion in January 2022, making it the company’s biggest deal to date. At the time, the software developer stated that the transaction will be completed by the end of June 2023. If the transaction falls through, Microsoft might owe Activision Blizzard a termination fee of up to $3 billion. The parties’ deadline of July 18 was missed, as was the time for an appeal of the Competition and Markets Authority’s decision to prohibit the merger. Meanwhile, European Commission officials had given their approval.

The FTC filed a lawsuit to stop the transaction in December 2022, seeking to have the matter heard by an internal administrative law court. The FTC’s case will be heard on August 2, according to the agency’s filing on Monday.

The in-house judge renders a ruling in an administrative case, which can be appealed to the whole commission. If the commission rules against Microsoft and Activision, they may file an appeal in federal court.

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We welcome the opportunity to present our case in federal court,” stated Microsoft President Brad Smith. We believe that accelerating the legal process in the United States will ultimately lead to more market choice and competition.

In an email to staff, Activision Blizzard CEO Bobby Kotick stated that the business appreciated the FTC’s decision to address the planned acquisition in federal court. If the commission rules against Microsoft and Activision, they may file an appeal with a federal court.

Our excellent legal team has been preparing for this move for more than a year, and we’re ready to present our case to a federal judge who can evaluate the transaction on its merits, he wrote. Smith was supposed to speak with UK Chancellor Jeremy Hunt about the transaction last week, according to Bloomberg, citing anonymous sources.

The European Union’s executive branch approved the pact in May, despite early concerns that it would decrease competition. Initially, regulators believed that Microsoft would be able to restrict other firms from releasing Activision Blizzard titles on systems other than Microsoft’s Xbox.

Microsoft offered Sony, its primary console rival, a ten-year deal to make every Call of Duty game accessible on Sony PlayStation at the same time it is available on Xbox. However, Sony has refused.

I’m not interested in a new Call of Duty deal. According to a tweet from Activision Blizzard executive Lulu Cheng Meservey, Sony Interactive Entertainment’s president and CEO, Jim Ryan, I just want to block your merger.