Microsoft’s Activision Blizzard Deal ‘Probably’ Faces Lawsuit From Feds To Try To Block It

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Well, here’s a pre-Thanksgiving wonder. According to political, it is “likely” that the Federal Trade Commission will try to block Microsoft’s attempt to buy Activision Blizzard for $68.7 billion. The agency could file an antitrust lawsuit as early as next month. If the FTC takes that step, it would be a huge hurdle to the deal.

MORE FROM FORBESThe FTC will reportedly review the agreement between Microsoft and Activision Blizzard

The report states that the four FTC commissioners have yet to vote on whether to file a lawsuit. The agency has not yet met with lawyers for Microsoft or Activision Blizzard about the possibility. Nevertheless, political claims that FTC staff members have disputed some of the claims made by Microsoft and Activision.

The FTC is said to be primarily concerned that the merger would give Microsoft an unfair advantage in the video game industry. As it is, Xbox is the third largest player in the gaming market behind PlayStation and Tencent.

Microsoft and Activision have tried to downplay the significance of the deal (which, again, is worth $68.7 billion). Sony has claimed that if Microsoft keeps games like Call of Duty off of the PlayStation, Sony would be at a huge disadvantage.

Sony could lose hundreds of millions of dollars a year if Microsoft pulls Call of Duty from the PlayStation. However, Microsoft said it offered Sony a deal earlier this month to keep Call of Duty on PlayStation for 10 years.

Microsoft has also said that the Activision deal is more about helping it become a gamer in mobile gaming (through companies like candy Crush Saga) that enhance your PC or console offering. You want to put Activision Blizzard titles on Game Pass anyway.

Microsoft and Sony have thrown mud at each other in regulatory filings in various countries over the past few months. Both have carefully chosen the facts to support their arguments. For example, Microsoft claims that Call of Duty is not a must-have game for Sony and that putting it on Game Pass wouldn’t hurt PlayStation.

Activision has disputed claims that the deal would also negatively affect competition. “Any suggestion that the transaction could have anticomp effects is completely absurd,” said Joe Christinat, a spokesman for Activision. political. “This merger will benefit US players and the gaming industry, especially as we face increasingly tough competition abroad.”

Last month, one of the FTC’s Republican members resigned, meaning the agency has three Democratic and one Republican commissioners as it stands. Noah Phillips, who left his post as commissioner, had opposed many of FTC Chair Lina Khan’s attempts to rein in the power of the tech industry. For example, he voted against a lawsuit seeking to block Meta’s purchase of a virtual reality startup called Within Unlimited. In other words, if Khan wants to file an antitrust lawsuit against the deal between Microsoft and Activision Blizzard, she will now likely face less resistance from other commissioners.

political says the FTC is most of the way through its antitrust investigation, which may have started as early as February. The agency has reportedly already heard testimony from Microsoft CEO Satya Nadella and Activision counterpart Bobby Kotick.

FTC regulators have other concerns about the Microsoft-Activision deal beyond Call of Duty. “Researchers are trying to determine how Microsoft could take advantage of unannounced future titles to boost its gaming business.” political He says. Regulators in the UK and EU are also taking a close look at the acquisition, meaning it will be at least the spring before Microsoft and Activision can close the deal, if at all.

I’ve been saying since it was announced that the planned merger is far from a done deal, but any lawsuit from the FTC could be a death blow. political notes that if the FTC files an antitrust lawsuit before the end of the year or in January, it is unlikely to be resolved before July, which is after the deadline Microsoft and Activision set to close the deal. If so, the companies would have to renegotiate their agreement or, failing that, disassociate themselves from the merger.

Again, there is no guarantee that the FTC will try to block the merger. But about politic the reports are usually strong and there is no smoke without fire. We will have to wait and see how things play out in the coming weeks and months.

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