Report: FTC ‘likely’ to file lawsuit to block Microsoft/Activision merger

Enlarge / Some of the Activision franchises that will become Microsoft properties if and when the acquisition is finalized.

Microsoft / Activision

The Federal Trade Commission will “likely” file an antitrust lawsuit against Microsoft and Activision Blizzard to block the companies’ anticipated $69 billion merger deal. It depends a new Politico report quoting “three [unnamed] people familiar with the subject. ยป

While Politico writes that a trial is still “not guaranteed,” it adds that FTC employees “are skeptical of the companies’ arguments” that the deal won’t be anti-competitive. The sources also confirmed that “much of the heavy lifting is complete” in the commission’s investigation, and that a complaint could be filed as early as next month.

Sony, the main opponent of the plan to buy Microsoft, quarreled publicly than an existing three-year contractual warranty to retain Activision’s best-selling Call of Duty The franchise on PlayStation is “inadequate on many levels”. In response, Microsoft Head of Xbox Phil Spencer publicly promised keep shipping Call of Duty games on PlayStation “as long as there’s a PlayStation to ship”. However, it is unclear whether the companies have recorded this offer as a legal agreement; The New York Times reported this week that Microsoft had offered a “10-year agreement to keep Call of Duty on Playstation.”

Numerous statements from Microsoft executives, including Spencer, have suggested that the company is less interested in strengthening its position in the “console wars” and more interested in strengthening its portable, cloud gameand Game Pass Subscription offerings. Beyond Call of DutyPolitico reports that the FTC is concerned about how Microsoft “could leverage future unannounced titles to boost its gaming business.”

Microsoft “stands ready to address concerns from regulators, including the FTC, and Sony to ensure the deal closes with confidence,” spokesman David Cuddy told Politico. “We will continue to follow Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.”

There are many speed bumps left

Reports of a potential FTC lawsuit add to a growing list of troubling signals regarding the proposed purchase from various international governments. Earlier this month, the European Commission said it was move to a ‘thorough investigation’ of the deal. In the UK, a similar “Phase 2” investigation by the country’s Competition and Markets Authority has scheduled a hearing for next month.

These international surveys should end in March, ensuring that the proposed deal doesn’t close before then and giving the FTC some time before it needs to file a lawsuit. Such a lawsuit would need to be approved by a majority of the FTC’s four current commissioners and would likely begin in FTC Administrative Tribunal. And regardless of the outcome, legal maneuverings in the case could easily delay the planned merger past the contractual deadline of July 2023, when the two companies would have to renegotiate or drop the deal.

Legal action by the FTC in this case would also be the strongest sign yet of a robust antitrust enforcement regime under FTC Chairman Lina Kahn, a major tech skeptic who was appointed to the post in June. Back in July, Kahn announced an antitrust lawsuit against Meta (formerly Facebook) and its plan to buy Within for $400 millioncreators of the VR fitness app Supernatural.

Three months after the plan to buy Microsoft was announced in January, a group of four US senators write an open letter strongly urging the FTC to take a close look at the deal. Last month, merger news site Dealreporter said FTC staff had expressed “significant concerns” about the deal. And this week, the New York Times quoted “two people” in reports that the FTC had contacted other companies for affidavits outlining their concerns about the deal, a possible sign of lawsuit preparations.

Leave a Comment

Your email address will not be published. Required fields are marked *