Game on: FTC tries again to block Microsoft Activision merger

Redmond says the deal is still on

The US Federal Trade Commission (FTC) on Tuesday revived its attempt to block Microsoft's planned $69 billion acquisition of game gurus at Activision Blizzard.

"The FTC continues to believe this deal is a threat to competition and we are placing this matter on the Commission’s Part 3 calendar ahead of our ongoing federal court appeal, but our current focus is on the federal appeal process," said Victoria Graham, FTC spokesperson, told The Register.

Activision Blizzard makes hugely popular games like Call of Duty and the FTC worries that Microsoft would withhold certain titles from rivals to force players to buy its Xbox game console or to limit the appeal of rival consoles. Not that it's ever done that before with, say, browsers, OEM operating system choices, or the like.

The US trade watchdog initially filed an administrative action to prevent Microsoft from acquiring Activision Blizzard on December 8 last year. This "adjudicative proceeding" is distinct from the civil judicial process; it allows charged parties to settle or dispute the charges. If disputed, the case gets handled by an administrative law judge.

Then on June 12 the FTC asked a federal court in California to issue a preliminary injunction to prevent the deal from being completed while the administrative action played out. In July, the district court denied that request and the FTC asked the Ninth Circuit Court of Appeals to review the district court's decision. The FTC then withdrew its complaint, which has now been reinstated [PDF].

That same month, coincidentally, the FTC and the US Department of Justice issued new merger guidelines, signaling a tougher stance on corporate deals.

Much of the FTC's case against Microsoft has been filed under seal, but the watchdog's brief [PDF] to the appeals court argues the deal would harm competition.

If the merger is consummated, it would enable Microsoft—at a key inflection point in a massive and growing industry—to foreclose platform rivals from a leading input provider: Activision, which produces some of the industry’s most popular games.

At stake, therefore, is whether the emerging subscription and cloud gaming markets will calcify into oligopolistic walled gardens or evolve into open, competitive landscapes, where games are platform-agnostic, new platforms can emerge to challenge established incumbents, and consumers are free to choose where and how to access their games.

Microsoft insists it's happy to work with regulators to address concerns, pointing to the UK Competition and Markets Authority's provision approval of the deal.

Oral arguments before the Ninth Circuit are scheduled for December 6, 2023. And Microsoft president Brad Smith said in a blog post last week that 38 signatories have filed nine "friend of the court" (amicus) briefs in support of the district court's decision to deny the preliminary injunction.

"Together, these briefs make it clear that this case is about more than a single transaction," said Smith. "They highlight the significance of establishing an environment in gaming and other industries that support the ability to challenge market leaders by encouraging innovation and creating favorable conditions for competition.

"As we've said since we announced this acquisition, our goal is to bring more games to more people and create new ways for people to buy games and for developers to reach their customers."

Asked about the FTC resuming efforts to block the Activision Blizzard deal, a Microsoft spokesperson told The Register, "We still anticipate that we will close the transaction by October 18, and we have full confidence in our case and the deal's benefits to gamers and competition." ®

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