On Monday (June 12, 2023), Bloomberg reported that the Federal Trade Commission (FTC) is gearing up to sue Microsoft Corp. The aim is to prevent the tech giant from finalizing its $69 billion acquisition of Activision Blizzard Inc. Bloomberg says this information was disclosed by an anonymous source familiar with the FTC’s plans.
According to Bloomberg’s source, the FTC intends to seek a court order to halt the transaction until the agency’s internal court has had the opportunity to rule on the deal. A trial within the FTC’s court is slated to commence in August.
Reacting to this development, Microsoft President Brad Smith said in a statement quoted by Bloomberg, “We welcome the opportunity to present our case in federal court.” Smith believes that expediting the legal process in the U.S. will ultimately result in more choice and competition in the market.
Bloomberg’s report also highlighted that the proposed acquisition has faced stringent antitrust scrutiny globally. While Microsoft, the maker of the Xbox console, has received approval in the European Union, the UK’s Competition and Markets Authority (CMA) ruled against the takeover in April.
Microsoft is currently appealing the CMA’s decision, which has global implications. Smith met with UK Chancellor Jeremy Hunt earlier this month to discuss the deal, as reported by Bloomberg. Following the CMA’s veto in April, Smith expressed his disappointment, stating that the decision had undermined “people’s confidence in technology in the UK.”
The FTC initially sued to block the deal in its in-house court in December, arguing that the acquisition would stifle competition in the US video game market. However, that complaint does not prevent Microsoft from closing the deal, prompting the FTC’s decision to seek an injunction from a federal judge.
The FTC’s trial is scheduled to begin on August 2, but a decision is not expected until the end of the year. The merger agreement between Microsoft and Activision Blizzard is set to expire on July 18. While the agreement can be extended, Activision Blizzard has the option to terminate the deal and receive a $3 billion break-up fee.
Microsoft President Brad Smith had this to say:
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