FTC withdraws case against Microsoft, Activision acquisition


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The Federal Trade Commission this week withdrew its case against Microsoft Corp. and Activision Blizzard Inc. that was set for trial Aug. 2.

The trial was scheduled to be held before an FTC administrative law judge. It was placed on hold Thurs.

This month, a U.S. federal judge denied the FTC a motion for preliminary injunction to block the Microsoft’s acquisition of Activision Blizzard. The Ninth Circuit Court of Appeals in San Francisco subsequently denied an appeal by the FTC to prevent the acquisition from closing.

The ruling found that the FTC failed to show that Microsoft would likely pull Call of Duty from the PlayStation or that an ownership of Activision content with substantially lessen competition in the video game library subscription and cloud gaming markets.

The FTC had alleged harm to competitors and subscription services by allowing Microsoft to deny titles to rival hardware, manipulate Activision’s pricing, or change terms and timing to access to Activision’s content.

It citied Microsoft’s acquisition of ZeniMax in Mar. 2021 which allowed the company to secure exclusive release of new game Ips including Starfield and Redfall for Xbox.

The acquisition would allow competitors access to Call of Duty. Microsoft hammered a 10-year agreement to release the popular first-person shooter franchise to Sony Corp.’s PlayStation, Nintendo Co., Ltd.’s Nintendo Switch, and Valve, Inc.’s Steam platform.

Microsoft in Jan. 2022 said it would acquire Activision Blizzard Inc. for $68.7 billion in an all-cash transaction.

The acquisition would propel Microsoft’s game business in console, PC, cloud, and mobile with franchises including Call of Duty, Warcraft, Diablo, Overwatch, and Candy Crush.

In addition, Microsoft plans to release Activision Blizzard titles to Xbox Game Pass, a monthly service that holds more than 25 million subscribers.

Microsoft and Activision this week extended the deadline to complete their merger to Oct. 18 pending regulatory issues in the UK.

The acquisition was previously scheduled to close July 18.

Under the new terms, if the deal does not close by Aug. 29, the termination fee payable by Microsoft will increase to $3.5 billion from $3 billion. If the deal does not close by Sept. 15, the fee will increase to $4.5 billion from $3.5 billion. The termination fee will only be paid if the deal fails to close.

This month, Microsoft, Activision, in addition to the UK-based Competition Markets Authority, agreed to pause Microsoft’s appeal against the CMA in order to resolve outstanding issues related to its acquisition of Activision Blizzard.

The Competition Appeal Tribunal this week granted a two-month stay to all parties to allow more time for a restructured deal.

In Apr., the CMA blocked Microsoft from acquiring Activision Blizzard.

It cited harm to competition from the merger due to Microsoft’s dominant market position in the cloud gaming market, incentive to increase the cost of Xbox Game Pass, reduced innovation and less choice for UK gamers.

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