Microsoft's Acquisition of Activision Blizzard Has Been Temporarily Blocked by a Restraining Order From the FTC
Update (6/13/23) - A federal court in California has issued a temporary restraining order requested by the FTC that effectively blocks Microsoft's $68.7 billion deal to acquire Activision Blizzard for the time being.
As reported by The Verge, the court in question agreed to issue the restraining order requested by the FTC as it considers the a preliminary injunction that would allow the FTC to make a legal case against Microsoft before the deal could be completed.
“Accelerating the legal process in the US will ultimately bring more choice and competition to the gaming market,” Microsoft spokesperson David Cuddy said in a statement to The Verge. “A temporary restraining order makes sense until we can receive a decision from the Court, which is moving swiftly.”
This order means Microsoft and Activision can not complete the deal until "after 11:59pm Pacific Time on the fifth business day after the Court rules on the FTC's request for a preliminary injunction" or, if it's later, a date set by the court.
As for the preliminary injunction, an evidentiary hearing on the matter will take place on June 22 and 23, and Microsoft and Activision will be able to "submit their brief in opposition to the motion for preliminary injunction by June 16, 2023." The FTC will then be able to submit its reply by noon on June 20.
It's important to note that the Microsoft and Activision deal would need to close before July 18, 2023, or the two parties will need to renegotiate. If they don't agree to new terms, Microsoft will need to pay Activision Blizzard a $3 billion breakup fee.
The original story follows.
The Federal Trade Commission (FTC) announced today that it has requested a "temporary restraining order" to prevent Microsoft's acquisition of Activision Blizzard.
“Microsoft and Activision Blizzard have represented in the past that they cannot close their deal due to antitrust reviews of the transaction in other jurisdictions," an FTC spokesperson told IGN in a statement sent via email. "But Microsoft and Activision have not provided assurances that they will maintain that position. In light of that, and public reporting that Microsoft and Activision Blizzard are considering closing their deal imminently, we have filed a request for a temporary restraining order to prevent them from closing while review continues.”
Shortly after the FTC confirmed it requested a temporary restraining order to prevent the deal from happening, Activision Blizzard CEO Bobby Kotick published a letter saying that the action was "a welcome update and one that accelerates the legal process." Kotick noted towards the end that the company is "ready to present [its] case to a federal judge who can evaluate the transaction on the merits."
Microsoft's vice chair and president, Brad Smith, tweeted out a response to the FTC's action, emphasizing that the FTC's decision should "accelerate the decision-making process."
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
Prior to the FTC's statement, several outlets like CNBC, CNN, and Reuters reported that the agency was planning to file an injunction against Microsoft. “We welcome the opportunity to present our case in federal court,” Smith said in a statement sent to CNN and Reuters. “We believe accelerating the legal process in the U.S. will ultimately bring more choice and competition to the market.”
In January 2022, Microsoft announced plans to buy Activision Blizzard for $69 billion. In December, the FTC sued Microsoft to block the deal from happening. An evidentiary hearing is scheduled for August 2nd. The FTC argues that if the deal were to go through, Microsoft would "gain control of top video game franchises" and, therefore, would "harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals' access to its popular content."
Microsoft Acquires Activision Blizzard: The Story So Far 20 Images
The other regulator to block the deal is the UK's Competition Markets Authority (CMA), citing concerns over the potential of the cloud gaming market. Microsoft has since appealed the decision, with hearings scheduled for the week of July 24.
Microsoft has announced a raft of initiatives aimed at addressing regulator concerns over the deal. Examples include Nvidia's 10-year agreement with Microsoft to bring Xbox Game Studios titles onto Nvidia's cloud gaming service, GeForce Now.
In regards to Microsoft's competition on the home console market, Microsoft struck a deal with Nintendo earlier this year, where the company announced plans to bring Call of Duty to Nintendo platforms "the same day as Xbox." Microsoft reportedly also offered a similar deal to Sony that would guarantee Call of Duty would remain on PlayStation platforms, but Sony hasn't accepted the deal, according to reports.
Taylor is a Reporter at IGN. You can follow her on Twitter @TayNixster.
Editor's Note: This story has been updated to provide a statement from the FTC and Activision Blizzard.
Source: IGN
