Enter yet another potential challenger to the multi-billion-dollar Microsoft and Activision Blizzard acquisition deal, as the Federal Trade Commission seems poised to file its own antitrust lawsuit against the deal.
According to a Politico report, people familiar with the matter see a likely antitrust lawsuit headed in the direction of the Microsoft and Activision Blizzard deal as early as December 2022 due to similarly stated concerns by other international regulatory bodies over potentially anticompetitive practices in the future.
While FTC Chair Lina Khan has not made any official statements regarding the proposed $68B deal between Microsoft and Activision, individuals who are close to an ongoing internal review are “skeptical of the companies’ arguments,” according to Politico.
With that being said, the FTC’s four commissioners have yet to convene for a vote on moving forward with an official complaint nor have they met with lawyers from Microsoft or Activision to discuss potential arbitration of concerns.
At the moment, Microsoft and Activision Blizzard face a volley of inquires and investigations into their proposed deal from heavy-hitting regulatory bodies that include the UK’s Competition and Markety Authority (CMA) as well as the EU and Chinese Antitrust Regulators who have all rejected the companies simplified filing request in favor of deeper reviews.
Microsoft and Activision contend publicly that recently announced probes are standard fair and present a confident front to investors that the multi-billion-dollar deal will pass with relative market concessions from either party.
Perhaps under normal circumstances a deal of this nature would slog its way through the approval process but players large and small in the gaming sector are becoming very vocal about potential abuse concerns while pointing to various instances of historical abuse.
Microsoft’s chief competitor in the gaming market, Sony, has led the rhetorical charge against the Activision deal citing the immense popularity of Call of Duty as a Trojan horse of anticompetitive outcomes. Despite Google shuttering its own direct cloud gaming competitor platform, the company has raised concerns about the leverage granted to Microsoft in the sector if the deal were to pass.
In response to mounting opposition to the deal, EVP of corporate affirms and CCO of Activision Blizzard Lul Cheng Meservey has reiterated the company’s commitment to the deal via Twitter.
We're committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won't hesitate to fight to defend the transaction if that's needed.
— Lulu Cheng Meservey (@lulumeservey) November 24, 2022
Head of Microsoft’s Xbox division Phil Spencer has recently offered further concessions to assuage Sony’s concerns regarding the multiplatform COD franchise ending up a console locked exclusive for Xbox by extending contractual obligations for a decade.
In addition, a Microsoft spokesperson issued the following statement:
As we have said before, we are prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.
For the time being, the FTC can sit back and watch both the EU and UK investigations before presenting their own objections, or they could forge an inquiry altogether as nothing is set in stone for the moment.
While Microsoft has cleared regulatory hurdles in Brazil and Saudi Arabia already, if the FTC does proceed with a lawsuit against the deal, the timing of which could send everyone back to the drawing board. Microsoft and Activision have until July 2023 to close on the currently proposed deal and both have confidence they will, by June 2023, but if the FTC does file next month or in January of 2023, the likelihood of the $68B acquisition being completed by the deadline becomes very uncertain.