FTC asks US court to block Microsoft’s $69bn takeover of Activision Blizzard

The US Federal Trade Commission is asking a court to block the sale of video game giant Activision Blizzard to Microsoft, to make time for its own internal proceedings against the buyout.

This marks just the latest in a series of regulatory setbacks for Microsoft’s purchase of Activision Blizzard, maker of such games as Call of Duty, Overwatch, Candy Crush and Warcraft.

In a complaint filed Monday (June 12) with the US District Court for the Northern District of California, which can be read in full here, the FTC asked for a restraining order and a preliminary injunction that would prevent Microsoft from completing the purchase of the video game company.

The move is necessary “because Microsoft and Activision have represented that they may consummate the proposed acquisition at any time,” the complaint stated.

Microsoft and Activision set a deadline of July 18 of this year to complete the buyout. The FTC’s proceedings against the tie-up are set to begin in August, CNBC reports.

The deal would make Microsoft the world’s third-largest gaming company by revenue, behind Tencent and Sony.

The FTC, an agency of the federal government responsible for the enforcement of antitrust laws and consumer protection, filed an antitrust case against Microsoft and Activision last December, arguing that the proposed buyout would harm consumers.

It would give Microsoft 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,” the FTC said in its complaint at the time

That drew a sharp response from Microsoft, which said that it had been willing to commit to making Call of Duty available on competing platforms.

“We have been committed since Day One to addressing competitive concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” Microsoft Vice-Chair and President Brad Smith said.

The FTC’s procedure involves challenging the buyout before an internal administrative law judge, who will hold a trial-like hearing and issue an order on the buyout. Microsoft and Activision will have the opportunity to take the case to a federal appeals court if they disagree with the order handed down by the administrative law judge.

Following the announcement of the all-cash deal, expected to be worth USD $68.7 billion, concerns arose that Microsoft, the maker of the Xbox video game console, could withhold Activision games, such as the very popular Call of Duty, from competing consoles such as the Sony PlayStation.

That has led to a number of regulatory rejections of the purchase, including by the UK’s Competition and Markets Authority (CMA), which blocked the deal in April, on the argument that it could harm competition in cloud gaming.

Microsoft appealed that ruling the following month, arguing the CMA had made “fundamental errors in its calculation and assessment of market share data for cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc).”

“The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth.”

Margrethe Vestager, European Commission

However, the European Union’s competition authorities approved the Microsoft-Activision deal in May, in light of “commitments” they received from Microsoft regarding the takeover.

Among those commitments were a plan by Microsoft to issue 10-year licenses to competing console makers for Activision games.

The European Commission concluded that Microsoft would have no incentive to withhold Activision games from Sony’s PlayStation – despite a complaint filed with the EU by the Japanese media and tech giant, raising concerns about this very scenario.

Noting that in Europe there are four Sony PlayStations for every Microsoft Xbox, the Commission said Microsoft “would have strong incentives to continue distributing Activision’s games” via competing devices.

“The commitments offered by Microsoft will enable for the first time the streaming of such games in any cloud game streaming services, enhancing competition and opportunities for growth,” said Margrethe Vestager, Executive VP in charge of competition policy at the European Commission.Music Business Worldwide

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