US Moves To Block Microsoft's Activision Blizzard Acquisition

sintania.amalia00 . June 14, 2023

Techspace - A US district judge has granted a Federal Trade Commission request to temporarily block Microsoft's $69 billion purchase of video game maker Activision Blizzard and is holding a hearing next week.

The US Federal Trade Commission (FTC) said the deal, which would be the largest in the history of the video game industry, could "substantially reduce competition" in the sector.

The move came after Britain blocked the deal fearing it would hurt competition, but the EU agreed.

Microsoft's bid to acquire video game maker Call of Duty has been approved by the EU but blocked by UK competition authorities, while the FTC, the US authority, argues that the transaction will give Microsoft's Xbox video game console exclusive access to Activision's games, leaving behind Nintendo and Sony PlayStation consoles. out in the cold.

Microsoft says the deal will benefit gamers and game companies alike, and has offered to sign a legally binding agreement decree with the FTC to provide Call of Duty games to rivals including Sony for a decade.

On Tuesday, June 13 Judge Edward Davila scheduled a two-day evidentiary hearing at the request of the FTC for a preliminary decision on June 22 and 23 in San Francisco. Without a court order, Microsoft could close the deal as early as Friday.

The FTC, which enforces antitrust laws, asked an administrative judge to block the transaction in early December. The evidentiary hearing in the administration process will begin on August 2.

Based on the final hearing in June, a federal court will decide whether a preliminary injunction that will last during an administrative review of the case is necessary.

Microsoft and Activision must file legal arguments against the initial decision by June 16. The FTC should reply by June 20.

The day before, Activision said that the FTC's decision to seek a federal court order was "a welcome update and one that expedites the legal process". On Tuesday, he declined to comment.

Microsoft said on Tuesday that "accelerating legal proceedings in the US will ultimately bring more choice and competition to the gaming market." A temporary restraining order makes sense until we can receive a decision from the court, which is moving quickly.”

The FTC said in court filings that "a preliminary injunction is required to ... prevent temporary damages" while regulators determine whether the "proposed acquisition violates US antitrust laws".

Microsoft's proposed takeover of Activision has split global regulators, and for a deal to pass through the parties require approval from regulatory agencies in the UK, EU, and US.

The European Commission has approved the acquisition, saying that Microsoft's offer of a 10-year free licensing deal - which promises European consumers and cloud game streaming services access to Activision's PCs and game consoles - means there will be fair competition in the market.

But the UK Competition and Markets Authority (CMA) blocked the deal in April, saying the takeover would reduce innovation and less choice for gamers.

Microsoft and Activision criticized the decision and said they would appeal. Microsoft president Brad Smith said it marked the company's "darkest day" in four decades working in the country.

Responding to the FTC announcement, Mr. Smith said Microsoft welcomed "the opportunity to present our case in federal court" in its efforts to persuade US regulators to allow the completion of the deal.

"We believe the accelerated legal process in the US will eventually bring more choice and competition to the market," he added.

In December last year, the FTC had asked an internal administrative judge to block the deal on antitrust grounds, arguing it would give Microsoft's Xbox exclusive access to Activision's games, leaving Nintendo's console and Sony's PlayStation in the cold.

William Kovacic, former chairman of the FTC and non-executive director at CMA England, said the FTC had expressed concern that Microsoft and Activision might close their deal despite Britain's opposition, and asked a judge to stop it.

Mr. Kovacic said there was still a chance the takeover could be completed, but added that the chances were diminishing.

The purchase of Activision, which also makes Candy Crush, is seen as important for Microsoft as it tries to catch up with its main competitor Sony.

However, this investment effort from Microsoft could be seen as playing for the future of gaming, with the company betting heavily on its Xbox Game Pass service, which it describes as "Netflix gaming".

Microsoft believes the future lies in players subscribing to libraries and streaming games through "cloud gaming", rather than making one-time purchases - which are the primary way to access games today.

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