FTC moves to block Microsoft’s $69B Activision Blizzard deal

The Federal Trade Commission (FTC) on Monday asked a court to temporarily block Microsoft from proceeding with its bid to acquire Activision Blizzard before the regulator has addressed the matter in a hearing.

The FTC said Microsoft and Activision — the publisher behind franchises such as Call of Duty, Diablo, and Warcraft — had indicated that the deal could be confirmed as early as this Friday and so has asked a federal judge to block any final agreement before then, Reuters reported.

Microsoft and the FTC have a hearing about the deal on August 2, but the regulator is worried that Microsoft may attempt to close it before then. “Both a temporary restraining order and a preliminary injunction are necessary because Microsoft and Activision have represented that they may consummate the proposed acquisition at any time,” the FTC says in the filing. The regulator added that if the deal goes through before its own hearing on the matter in early August, then it would be difficult to undo.

A delay would also mean that Microsoft’s appeal to the U.K.’s Competition and Markets Authority, which blocked the deal in April over concerns that it could negatively impact the nascent cloud gaming market, would be heard before the deal’s July 18 deadline. European Commission regulators gave the deal the nod in May, saying it was happy with Microsoft’s reassurances over antitrust concerns linked to cloud gaming.

The proposed $69 billion deal would be Microsoft’s priciest acquisition and the biggest-ever in the video game industry, but the FTC isn’t happy about it.

The regulator has concerns that a Microsoft-owned Activision would give the computer giant an unfair advantage over rivals, and as a consequence moved to block the deal in December 2022.

The FTC’s filing with a California court on Monday describes Microsoft as having the “ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition, including competition on product, quality, and innovation.”

In real terms, that could mean Microsoft preventing popular Activision titles from launching on the Sony PlayStation, or, if it did launch, offering fewer features than the version for Microsoft’s Xbox.

Microsoft insists that taking over Activision would be advantageous for both the gaming industry and gamers, and has even offered to put its name to a legal document that promises the availability of games like Call of Duty to other consoles for a decade.

If Microsoft fails in its bid to acquire Activision Blizzard, it could face a termination fee of as much as $3 billion.

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