Microsoft's ambitious plan to acquire Activision Blizzard for $69 billion has been temporarily halted. The US District Court of Northern California has granted the Federal Trade Commission's (FTC) request for a temporary restraining order, preventing Microsoft from finalizing the deal before its deadline. The court ruling states that the transaction cannot be completed until a specific date set by the court or after a certain time period following the Court's ruling on the FTC's request for a preliminary injunction.
Upcoming Preliminary Injunction Hearing
The legal battle continues with a hearing for a preliminary injunction against closing the deal, scheduled for June 22 or 23. Suppose the court rules in favor of the FTC to grant that injunction. In that case, the US regulator will have the opportunity to convince a judge that Microsoft's planned purchase of Activision Blizzard should be blocked without the risk of the two companies closing the deal prematurely.
Potential Financial Implications for Microsoft
If Microsoft cannot complete its acquisition plans by July 18, or negotiate another deal with Activision Blizzard to delay it beyond that date, Microsoft will have to pay the publisher a breakup fee of $3 billion. This comes after Microsoft already paid the FTC $20 million this month in a separate case.
As we reported earlier, the FTC argues that the acquisition would harm competition in the video game industry. Microsoft, being the world's largest gaming company, would gain control of a large number of popular gaming franchises, including Call of Duty, World of Warcraft, and Candy Crush. The FTC also claims that the deal would reduce innovation and diversity in the gaming market and would eliminate a potential rival to Microsoft's cloud gaming ambitions.
Mixed Reactions from Global Regulators
The acquisition of Activision Blizzard would be Microsoft's largest-ever deal and would make it the world's second-largest game maker behind Nintendo. While the deal has been accepted by many global regulators, including the European Commission and Japan's regulator, it has faced opposition from others. The UK's Competition and Market Authority (CMA) rejected the deal, leading Microsoft to consider bypassing the UK order and pressing ahead with the deal, or alternatively, withdrawing Activision from the UK market.
Microsoft's Strategy
Microsoft has expressed its willingness to present its case in federal court, believing that accelerating the legal process in the U.S. will ultimately bring more choice and competition to the market. The company is also appealing the UK's decision to block the deal. The final decision on whether this merger happens or not will come from the US, making the outcome of these discussions and the appeal hearing crucial for the global tech and gaming industries.
You can keep track of all aspects of this deal, past, present, and future by checking out our Microsoft Activision Blizzard merger timeline stories. Alternatively, check out Microsoft's official hub.
