What just happened? As regulators across the globe have largely approved Microsoft's historically expensive bid to purchase the publisher of games such as Call of Duty, Diablo, and Overwatch, the United States and the United Kingdom have emerged as the deal's primary opponents. The two companies responded to the latest move by the US regulator with optimism.
This week, the US Federal Trade Commission (FTC) filed an injunction in a federal court to prevent Microsoft from finalizing its $69 billion deal to acquire Activision Blizzard. This action reinforces the regulator's position alongside the UK Competition and Markets Authority (CMA) as the only two official bodies opposing the acquisition.
When Microsoft first announced the merger in January 2022, it anticipated completing the deal by the end of the 2023 fiscal year, which concludes this month. The FTC, suspecting that the two companies would aim to finalize the purchase as early as this week, requested a federal judge to halt any definitive agreements between them before June 15.
The FTC had previously filed an antitrust lawsuit against the deal, scheduling a hearing for August 2, which is well beyond the July 18 contractual deadline. Although missing the deadline would technically require Microsoft and Activision Blizzard to renegotiate the terms, the companies appear to remain committed to the acquisition.
Today's action by the FTC to file suit in our Activision case in federal court should accelerate the decision-making process. This benefits everyone. We always prefer constructive and amicable paths with governments but have confidence in our case and look forward to presenting…
– Brad Smith (@BradSmi) June 12, 2023
The heads of both companies responded positively to this week's injunction, expressing confidence that a federal judge would rule in their favor. Microsoft's president and vice-chair, Brad Smith, tweeted that moving to federal court would expedite the process, and Activision Blizzard CEO Bobby Kotick echoed this sentiment in an email to employees.
One of the bigger concerns surrounding the merger is that Microsoft's control over the immensely popular Call of Duty franchise could give Xbox an unfair advantage over PlayStation. Sony has repeatedly suggested that Microsoft might withhold Call of Duty from PlayStation or find ways to degrade PlayStation versions of the games. Microsoft, however, has repeatedly assured that it would maintain parity.
When the CMA decided against approving the deal in April, it instead cited worries over the emerging cloud market as its main reason. Microsoft's Xbox Cloud Gaming service currently dominates the small but growing segment. However, the company has secured deals to make its titles available on multiple cloud gaming providers, including Nvidia's GeForce Now.
The FTC noted concerns over cloud gaming and retail sales in the injunction, citing the recent historic success of Blizzard's Diablo IV as evidence of the company's outsized importance in the market. Less than 24 hours after the game's June 6 launch, Diablo IV became Blizzard's fastest-selling game to date.
Regulators in the European Union, South Korea, China, Brazil, and other countries have approved the acquisition.
