US Regulators Secure Temporary Block on Microsoft’s $69 Billion Purchase of Activision Blizzard
Regulators in the United States have successfully obtained a temporary restraining order from a judge, effectively halting Microsoft’s planned acquisition of Activision Blizzard for $69 billion (£56 billion). The court’s decision aims to maintain the current state of affairs while the complaint is being reviewed. The US Federal Trade Commission (FTC) expressed concerns that the deal could significantly reduce competition within the industry. A two-day hearing is scheduled to commence on June 22 in San Francisco.
The proposed acquisition, set to be the largest in the history of the video game sector, faced opposition from the FTC. Without the court’s intervention, the deal could have been finalized by the end of this week, despite the UK already blocking the takeover back in April.
Both Microsoft and Activision have until June 16 to present legal arguments opposing the preliminary injunction. The FTC, responsible for enforcing competition law in the US, will then respond by June 20.
The FTC argues that the deal would grant Microsoft’s Xbox exclusive access to Activision games, potentially excluding Nintendo consoles and Sony’s PlayStation. In response, Microsoft claims that the acquisition would benefit gamers and gaming companies, offering to sign a legally binding agreement with the FTC to provide Call of Duty games to competitors like Sony for a decade.
The UK previously blocked the deal due to concerns about its impact on competition, while the European Union approved it. The parties involved must secure approval from regulatory bodies in the UK, the EU, and the US for the acquisition to proceed.
The European Commission approved the acquisition, citing Microsoft’s offer of 10-year free licensing deals as a means of ensuring fair competition in the market. Conversely, the UK’s Competition and Markets Authority (CMA) rejected the deal, citing worries about reduced innovation and limited choices for gamers. Microsoft and Activision have expressed their intent to appeal the CMA’s decision.
Brad Smith, President of Microsoft, referred to the FTC’s announcement as the company’s “darkest day” in its four-decade history in Britain. He expressed gratitude for the opportunity to present their case in federal court, emphasizing Microsoft’s belief that expediting the legal process in the US will ultimately introduce more choice and competition to the market.
Microsoft views the purchase of Activision, the creator of Candy Crush, as crucial in its pursuit to catch up with main competitor Sony. The move is seen as an investment in the future of video games, with Microsoft banking on its Xbox Game Pass service, often dubbed the “Netflix of games.” The company envisions a future where players subscribe to gaming libraries and stream games through cloud gaming, departing from the traditional model of one-off game purchases that currently dominates the industry.
