FTC files to block Microsoft-Activision, fearing Microsoft will withhold game content from rivals

On Monday, the Federal Trade Commission applied for a A temporary restraining order and an initial order It seeks to block Microsoft’s acquisition of Activision Blizzard before the July 18 deal deadline.

CNBC reported on the FTC’s plans earlier in the day.

The FTC said it feared that if Microsoft were allowed to buy Activision, Microsoft would have the ability to “withhold or dilute” Activision’s gaming products, through price, game quality, or experience over competitors’ offerings or by “withholding content from competitors altogether”.

In other words, the FTC is concerned that Microsoft may prevent popular games from Activision Blizzard’s library from running on other game consoles, such as those sold by Sony. Or you may charge more for games launched on other consoles. Call of Duty is one game that has come out, and while it is currently available across platforms and Microsoft has promised to continue to sell these games widely, regulators fear that Microsoft may have the ability to keep these games for Xbox and thus turn buyers away from Sony and other console makers. control.

If the parties are allowed to merge before the case works its way through an administrative proceeding, the FTC has argued that “re-establishing the status quo would be difficult, if not impossible.”

Microsoft announced its intention to buy Activision Blizzard For $68.7 billion in January 2022, in its largest deal to date. At the time, the software maker said it expected to close the deal by the end of June 2023. If the deal falls through, Microsoft could end up with Activision Blizzard demanding a termination fee of up to $3 billion.

The FTC sued to block the takeover in December 2022, opting to take the case before an internal administrative law judge. The agency said in a filing on Monday that a hearing on the FTC case will begin Aug. 2.

In an administrative case, the internal judge issues a decision that can be appealed to the full panel. If the committee votes against Microsoft and Activision, they can appeal the case to federal court.

The injunction request comes as the deadline for the deal approaches. The FTC hearing and appeal of the UK Competition and Markets Authority’s decision to block the deal came after the parties’ July 18 deadline. Meanwhile, regulators at the European Commission cleared the acquisition.

The FTC told the court that the preliminary injunction was necessary “because Microsoft and Activision have indicated that they may complete the proposed acquisition at any time.”

“We welcome the opportunity to present our case in federal court,” said Brad Smith, President of Microsoft. “We believe that accelerating the legal process in the United States will ultimately provide more choice and competition in the marketplace.”

Brad Smith, Microsoft’s president and vice president, was scheduled to meet last week with British consultant Jeremy Hunt about the deal, bloomberg Reported quoting unnamed people.

In May, the European Union’s executive arm then approved the deal At first saying She was concerned that the deal would reduce competition. Regulators originally felt that Microsoft might be able to prevent other companies from distributing Activision Blizzard games such as Call of Duty titles to consoles other than Microsoft’s Xbox.

Microsoft has offered its main console rival, Sony, a decade-long contract to make every Call of Duty game available on the Sony PlayStation at the same time it gets it on the Xbox. But Sony did not accept.

Jim Ryan, President and CEO of Sony Interactive Entertainment, said tweet From Lulu Cheng Meservey, Activision Blizzard executive.

This story is evolving. . Please check back for updates

He watches: Microsoft CEO Satya Nadella talks about the relationship of OpenAI, generative AI, and the Microsoft-Activision agreement