The Microsoft-Activision drama seems to have no end, with the controversy taking new and interesting turns fro time to time. Just when things start to seem in favour of Microsoft, it is faced with a newer challenge. This time around its not a new challenge but an old one has cropped up.
Just when the UK government gave a provisional nod for the deal to go ahead, the US Federal Trade Commission (FTC) has decided to revive its attempt to stop Microsoft from executing the $69 billion acquisition deal with gaming giant Activision Blizzard.
The FTC has said that it will resume it’s administrative case against Microsoft Activision Blizzard acquisition pic.twitter.com/d1hOwjee95
— OVOgaming (@OvoGamingNews) September 27, 2023
It is not the first time the US trade watchdog has attempted to block the deal. The FTC has filed multiple lawsuits in the past and has faced legal defeats in all of them. Despite the unsuccessful attempts, FTC is back at it.
Why is FTC blocking the Microsoft-Activison deal?
As the news of FTC announcing to continue its opposition broke out, Victoria Graham, FTC spokesperson, told The Register, “The FTC continues to believe this deal is a threat to competition and we are placing this matter on the Commission’s Part 3 calendar ahead of our ongoing federal court appeal, but our current focus is on the federal appeal process.”
FTC had initially initially filed an administrative action to prevent the acquisition on December 8, 2022. This was a “adjudicative proceeding” which is different from the civil judicial process; since it allows the charged parties to settle or dispute the charges. In case of dispute, the case is handled by an administrative law judge.
Following that, on June 12, 2023, the FTC requested the federal court in California to issue a preliminary injunction to stop the deal while the administrative action played out. In the following month, the appeal was ruled in favor of Microsoft’s Activision Blizzard acquisition this July by the San Francisco-based federal court.
After facing defeat in the trial, FTC immediately appealed the verdict with the 9th Circuit U.S. Court of Appeals, only to withdraw the complaint later and now reinstate it again. Interestingly, in the same month the FTC and the US Department of Justice issued new merger guidelines, indicating a tougher stance on corporate deals.
Most contents of the FTC’s case against Microsoft has been filed under seal, however, FTC’s brief to the appeals court suggests that the deal would harm competition. It states that if all the acquisition is executed, it would enable Microsoft to cutoff platform rivals like Sony, from a leading input provider Activision and its products. Especially since Microsoft is at a key inflection point in a massive and growing industry.
On the other hand, Microsoft is insisting that is happy to work with regulators to address these said concerns, while highlighting the UK Competition and Markets Authority’s provision approval of the deal.
Trial oral arguments before the Ninth Circuit will take place on December 6, 2023. Meanwhile, Microsoft president Brad Smith in a blog post published last week stated that 38 signatories have filed nine “friend of the court” briefs to support the district court’s decision to deny the preliminary injunction.
The post read, “Together, these briefs make it clear that this case is about more than a single transaction. They highlight the significance of establishing an environment in gaming and other industries that support the ability to challenge market leaders by encouraging innovation and creating favorable conditions for competition.”
Smith further adds, “As we’ve said since we announced this acquisition, our goal is to bring more games to more people and create new ways for people to buy games and for developers to reach their customers.”
When asked about the latest news of FTC resuming its efforts to stop the Activision Blizzard deal, a Microsoft spokesperson said, “We still anticipate that we will close the transaction by October 18, and we have full confidence in our case and the deal’s benefits to gamers and competition.”
Activision Blizzard is a game developer and the name behind some of the most popular game titles including Call of Duty. The FTC is basically worried that Microsoft would gain monopoly over certain titles thus forcing players to buy its Xbox game console and limiting the appeal of rival consoles.
