Due to the actions of authorities, Microsoft and Activision Blizzard’s pending $68.7 billion deal cannot be completed at this time. Following the attempted acquisition, which was announced in January 2022, Microsoft came under much scrutiny by regulators over concerns about unfair competition. In particular, rival giant companies such as Sony are investigating whether this situation will prevent competition in the console and cloud gaming market. Now, a new court order temporarily blocked the acquisition.
Federal Judge Blocks the Microsoft-Activision Blizzard Acquisition
The FTC recently filed a complaint containing a restraining order and a request for a preliminary injunction regarding the Microsoft and Activision Blizzard deal. In considering this complaint, the federal court issued a restraining order that would temporarily prevent the deal from moving forward. The court also held an evidentiary hearing on June 22nd and 23rd regarding the injunction order. This doesn’t prevent the deal itself. However, the court is hindering consolidation in the process of considering complaints, and this could make Microsoft’s job pretty difficult as the merger deadline of July 18 approaches.
With the latest developments, it has become almost impossible for Microsoft to complete the deal this month. Also, if the deadline is exceeded, Microsoft will have to pay a $3 billion breakup fee to Activision Blizzard unless said deadline is renegotiated. However, there isn’t much concern on Microsoft’s side because they think the court will decide in their favor.
According to Microsoft spokesperson David Cuddy, this deal will bring more choice and competition to the gaming market. The company considers this temporary restraining order reasonable and is looking forward to the final decision. The FTC’s request for a preliminary injunction comes after UK regulator CMA’s blocked the acquisition in May. Although Microsoft has appealed this decision, they face lawsuits and scrutiny every day as the deadline approaches.
In another lawsuit filed by the FTC in December 2022, the following statements were made against the transaction between Microsoft and Activision Blizzard.
”Agency alleges that maker of Xbox would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content.”