US judge temporarily blocks Microsoft's Activision deal at request of FTC

A federal judge has granted an injunction against the $69 billion deal, ahead of a hearing scheduled for later this month.

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A district judge in San Francisco has granted a Federal Trade Commission (FTC) request to temporarily block Microsoft’s proposed $69 billion acquisition of Activision Blizzard, ahead of a hearing on June 22.

Judge Edward Davila ruled that a “preliminary injunction is warranted [to] preserve the FTC’s ability to obtain an effective permanent remedy” to its antitrust concerns. Microsoft and Activision have until June 16 to submit their opposition to the motion, while the FTC must respond by June 20.

An evidentiary hearing will be held on June 22 for the judge to hear oral arguments about whether the injunction should remain in force until the FTC's antitrust case is resolved. The ruling on the FTC's request for an injunction comes six months after the FTC filed its initial antitrust case against the acquisition, arguing that if the deal were to go ahead, Microsoft would have an “increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price, and innovation.”

“This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry,” the FTC’s complaint read.

Microsoft did not seem to be fazed by the FTC's request for an injunction to be in place until the antirust complaint is resolved. "The temporary order should accelerate the decision-making process. This benefits everyone,” tweeted Microsoft President Brad Smith. “We always prefer constructive and amicable paths with governments but have confidence in our case and look forward to presenting it.”

A Microsoft spokesperson reiterated Smith’s point, adding that a “temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.”

Since Microsoft first announced its intention to acquire Activision Blizzard in January 2022, the deal has faced a number of roadblocks, including antitrust investigations from the UK's Competition and Markets Authority,  the FTC, and the European Commission.

The EU Commission ultimately cleared the deal in May 2023, saying it was reassured that commitments offered by Microsoft “fully address the competition concerns identified by the Commission,” and that the approval is conditional on full compliance with the commitments. Microsoft has committed to license popular Activision Blizzard games automatically to competing cloud gaming services.

However, the previous month, the UK's CMA blocked the acquisition, arguing the deal could “alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”

Microsoft and Activision appealed the decision and the case is now being heard by the UK's Competition Appeal Tribunal.

Copyright © 2023 IDG Communications, Inc.

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