The Federal Trade Commission (FTC) has taken a significant step in the ongoing process of Microsoft’s acquisition of Activision Blizzard, formally putting its administrative trial on hold. This move, aimed at facilitating settlement talks, comes in light of the eye-catching $68.7 billion merger that has been making headlines in the gaming industry.
Bloomberg first reported the FTC’s decision to halt the case, giving Microsoft and Activision an opportunity to engage in discussions with the agency regarding a potential resolution. The FTC had previously taken legal action to block the merger, leading to an evidentiary hearing scheduled for August 2nd. However, last week, the agency suffered a legal setback when it failed to prevent the companies from merging before the administrative trial. Despite the setback, the FTC has appealed the court’s decision.
In a ruling last week, Judge Jacqueline Scott Corley expressed skepticism about the FTC’s claims that the merged company might remove popular game “Call of Duty” from Sony’s PlayStation platform or harm competition in the video game library subscription and cloud gaming markets. Microsoft has sought to address these concerns and solidify its commitment to keeping “Call of Duty” available on PlayStation for a decade if the merger is approved.
Taking advantage of the recent court ruling, Microsoft and Activision have filed a motion urging the FTC to withdraw its case. Under FTC rules, the agency is required to withdraw the case upon such a request after being denied a preliminary injunction. Following this development, the companies now have an opportunity to present remedies to the FTC, addressing the agency’s concerns about potential impacts on competition in the gaming industry. They can also attempt to convince the FTC to abandon its opposition to the merger altogether.
The FTC still retains the option to proceed with the administrative trial after the merger closes. However, it is unusual for the agency to pursue an in-house case following a federal court loss.
Originally set for Tuesday, the deadline for the acquisition’s completion was extended until October 18th by mutual agreement between Microsoft and Activision. This extension allows additional time for resolving any remaining regulatory concerns. In the event that the deal collapses, Microsoft is obligated to pay a breakup fee of up to $4.5 billion. Nonetheless, both parties remain determined to finalize the merger.
Another hurdle for Microsoft and Activision lies in obtaining approval from a UK regulator. The Competition and Markets Authority (CMA) initially rejected the merger in April due to concerns over its impact on the cloud gaming market. However, recent developments suggest a willingness to reach an amicable resolution. Microsoft is preparing an updated merger proposal for submission to the CMA, with the regulator expected to make a decision by August 29th.
As the process moves forward, both Microsoft and the CMA express confidence in resolving any remaining issues, signaling that the monumental gaming industry merger is likely to be successfully completed in the coming weeks. Gamers and industry observers eagerly await the outcome as the landscape of the gaming world potentially undergoes a transformation with this historic union.
