Microsoft's $69 billion takeover of Activision Blizzard has been temporarily blocked by a judge in response to a request from US regulators. The court issued a restraining order to maintain the current state of affairs while the complaint is being considered. The US Federal Trade Commission (FTC) expressed concerns that the deal could substantially reduce competition in the industry. A two-day hearing is scheduled to take place in San Francisco starting on June 22.
The proposed acquisition of Activision Blizzard, known for popular games like Call of Duty and Candy Crush, would be the largest in the history of the video games industry. Regulatory opinions on the deal have been divided, with the UK blocking the buyout while the European Union approved it. To proceed, Microsoft and Activision need approval from regulators in the UK, the EU, and the US.
The FTC argued that the deal would grant Microsoft's Xbox console exclusive access to Activision games, sidelining competitors like Nintendo and Sony. In response, Microsoft offered to sign a legally binding agreement with the FTC to provide Call of Duty games to rivals, including Sony, for a period of ten years. Microsoft believes that acquiring Activision would benefit gaming companies and players.
While the European Commission approved the acquisition, citing Microsoft's offer of ten-year free licensing deals that ensure fair competition in the market, the UK's Competition and Markets Authority (CMA) blocked the deal due to concerns about reduced innovation and limited choice for gamers. Microsoft and Activision expressed their disagreement with the CMA's decision and announced their intention to appeal.
Brad Smith, President of Microsoft, referred to the FTC's announcement as the company's "darkest day" in its four decades of working in Britain. However, in response to the FTC's decision, Smith expressed gratitude for the opportunity to present their case in federal court, hoping to convince US regulators to allow the completion of the deal. Microsoft believes that expediting the legal process in the US will ultimately foster more choice and competition in the market.
Microsoft's interest in acquiring Activision, which also owns Candy Crush, is viewed as crucial in catching up with its main competitor, Sony. The move can be seen as Microsoft's strategic investment in the future of video games, as it heavily relies on its Xbox Game Pass service, often described as the "Netflix of games." Microsoft envisions a future where players subscribe to libraries and stream games through cloud gaming, rather than relying on individual purchases, which is the predominant method of accessing games at present.
