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The $69 Billion Microsoft-Activision Deal Suffers Fresh Setback

Microsoft-Activision deal suffer another setback featured

More roadblocks have emerged on the path of the $69 billion Microsoft-Activision deal. A judge in the United States granted the Federal Trade Commission’s (FTC) request to temporarily block the acquisition late Tuesday 13 June 2023. The judge also set a hearing for next week.

Microsoft-Activision deal

U.S. District Judge Edward Davila scheduled a two-day evidentiary hearing on the FTC’s request for a preliminary injunction for June 22 to 23 in San Francisco. According to a CNN report, the Microsoft Activision deal would have closed as early as Friday, June 16, if not for the court order.

In December 2022, the FTC, which is tasked with the enforcement of antitrust law, asked an administrative judge to block the transaction. An evidential hearing in the administrative proceeding is scheduled for August 2.

ALSO READ: FTC Slams $20M Fine On Microsoft For Breaching COPPA

According to Davila, the temporary restraining order issued on Tuesday was “necessary to maintain the status quo while the complaint is pending (and) preserve this court’s ability to order effective relief in the event it determines a preliminary injunction is warranted and preserve the FTC’s ability to obtain an effective permanent remedy if it prevails in its pending administrative proceeding”.

To keep the Microsoft-Activision deal alive, both companies must submit legal arguments opposing a preliminary injunction latest June 16 and the FTC must reply on or before June 20. The June 22 and 23 hearing will determine whether the federal court will issue a preliminary injunction—which would last through the administrative review of the case.

On Tuesday, Microsoft said that “accelerating the legal process in the U.S. will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.”

Why FTC is opposing the Microsoft-Activision deal

Microsoft-Activision deal suffer another setback featured

Just like the British regulators, the FTC argues that if the Microsoft-Activision deal is allowed to continue, it will give Xbox exclusive access to Activision games. Consequently, that will cut off Sony Group Corp’s PlayStation and Nintendo from accessing Activision games—and hurt the experience for gamers.

On the contrary, Microsoft continues to insist that the deal would benefit gamers and gaming companies. To demonstrate their sincerity, Microsoft has agreed to sign a legally binding consent decree with the FTC to make Activision’s “Call of Duty” games available on rival platforms like PlayStation for a decade.

Earlier in April, British regulators (Competition and Markets Authority) also blocked the Microsoft-Activision deal on the ground that it will give Microsoft an unfair competitive advantage in cloud gaming which the regulators touted as the future of the gaming industry.

In May, EU regulators gave the Microsoft-Activision deal a nod in contrast to the decision of the British regulators. According to EU regulators, Microsoft’s willingness to offer 10-year free licensing for Activision’s games will ensure fair competition in the market.

The British regulators maintained their stand regardless of what the EU regulators thought about the deal. See all the timelines of the Microsoft-Activision deal here.

Why does Microsoft desperately need to close the Activision deal

Xbox event

Some gamers may be wondering why Microsoft is pushing on to close the Activision deal amidst several regulatory roadblocks. The easier decision would be to let it go. However, as we reported after the Xbox Games Showcase 2023, Microsoft lacks a roster of Xbox-exclusive games to stay in the competition.

Nintendo has legendary titles like Mario and Zelda while PlayStation has a long list of exclusives including Spider-Man and God of War. The only worthy Microsoft exclusive game was Halo—which is now dead.

Sealing the Activision deal will significantly expand Xbox’s exclusive game roster and give Microsoft a stronger fighting chance against Sony’s PlayStation. The Xbox Games Showcase 2023 had a list of promising Xbox exclusives. However, they are mostly scheduled for 2024.

ALSO READ: Microsoft’s $69 Billion Activision Takeover Inches Closer To Success

If the Microsoft-Activision deal eventually becomes a success—which we strongly doubt—it will be the single largest cash acquisition in the gaming industry. Microsoft continues to promote subscription-based gaming in favor of one-off purchases for consoles.

Do you think the Microsoft-Activision deal will somehow evade the regulatory roadblocks and become a success? Share your thoughts with us in the comment box below.

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