FTC Blocks Microsoft Activision Acquisition

The Federal Trade Commission (FTC) on Monday issued a temporary halt to the proposed acquisition of Activision Blizzard by Microsoft on Monday.

The temporary injunction and restraining order (PDF) was issued as Microsoft is looking to close its $68.7 billion deal for the video game publisher before the July 18 deadline. In the order, the FTC said that if Microsoft acquires the company, it would hurt overall customer product quality.

"With control of Activision's content, Microsoft would have the ability and increased incentive to withhold or degrade Activision's content in ways that substantially lessen competition -- including competition on product quality, price and innovation," read the order. "This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry."

The order pointed to Microsoft's past acquisitions of ZeniMax Media, which is the parent company of Bethesda Softworks, as an example of previous consumer harm by the company. Despite Microsoft assuring the European Commission that it would not stop Bethesda games from going to competing platforms, it has withheld the latest Bethesda releases from appearing on Nintendo or Sony consoles.

While this week's order does not look to actively kill the pending deal, the FTC said it is attempting to have assurances built in by Microsoft before the close of the deal to avert any possible consumer harm. It also stated that the injunction was necessary to "protect competition" during the FTC's current administrative proceedings and review of this merger.  

This order may potentially hinder the deal from completing by the July 18 deadline, as the injunction will "prevent Defendants from consummating the Proposed Acquisition until after the fifth business day after this Court rules on the Commission’s motion for a preliminary injunction."

If the deal is not closed by July 18, Microsoft and Activision Blizzard will have to renegotiate the deal, with Microsoft potentially paying Activision Blizzard $3 billion if new terms could not be met.

 For Microsoft's part, it sees this week's order as a necessary step in closing what would be the biggest corporate merger of all time. Today’s action by the FTC to file suit in our Activision case in federal court should accelerate the decision-making process," wrote Brad Smith, President of Microsoft, in a tweet.
"This benefits everyone. We always prefer constructive and amicable paths with governments but have confidence in our case and look forward to presenting it."

About the Author

Chris Paoli (@ChrisPaoli5) is the associate editor for Converge360.


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