Federal Trade Commission opposes purchase, which would be largest in video-game industry history, on antitrust grounds
The Federal Trade Commission has filed a court request to temporarily halt Microsoft’s acquisition of Activision Blizzard. The FTC aims to delay the deal’s closure until their case against the $69 billion transaction is heard. Expressing concern, the FTC noted that Microsoft and Activision had indicated the deal could be finalized by Friday. Consequently, the FTC is urging a federal judge to prevent any final agreement before 11:59 pm ET on June 15th.
The FTC raised concerns about Microsoft’s proposed deal, emphasizing its potential to stifle competition and provide Microsoft with control over Activision’s content. The deal, being Microsoft’s largest and the video game industry’s most significant to date, prompted the FTC to express worries about the combined company’s ability to manipulate Activision’s operations and obtain sensitive business information. The FTC, responsible for enforcing antitrust laws, had previously requested an administrative judge to block the transaction due to antitrust concerns in early December. Their argument centered on Microsoft’s potential exclusive access to Activision games on Xbox, potentially leaving Nintendo and Sony’s PlayStation at a disadvantage.
In May, the European Union granted approval for Microsoft’s $69 billion bid to acquire the creator of Call of Duty. However, British competition authorities intervened in April and blocked the takeover. Microsoft’s shares rose by 1.5% on Monday, while Activision experienced a 0.8% decline.
In a statement, Microsoft President Brad Smith expressed appreciation for the opportunity to present their case in federal court. Activision did not provide any comments on the matter.
Microsoft has argued that the acquisition would be beneficial for gamers and gaming companies. As part of their proposal, they offered to sign a legally binding consent decree with the FTC, committing to provide Call of Duty games to competitors, including Sony, for a duration of ten years. When the deal was announced in January 2022, Microsoft anticipated its completion within their fiscal year 2023, which concludes in June.
The situation exemplifies the robust antitrust enforcement strategy pursued by the Biden administration.
However, according to antitrust experts, the FTC is likely to encounter challenges in persuading a judge to halt the deal due to the voluntary measures proposed by Microsoft to alleviate concerns regarding potential dominance in the gaming market.
