California residents who follow developments in the entertainment sector will probably know that Microsoft has offered $68.7 billion to acquire the video game developer Activision Blizzard. The proposed acquisition is fiercely opposed by Microsoft gaming rival Sony, and The United Kingdom’s Competition and Markets Authority has blocked the deal. The U.S. Federal Trade Commission has also voiced opposition to the acquisition.
Federal judge blocks acquisition
Industry experts expected Microsoft’s acquisition of Activision Blizzard to be completed as early as June 16 despite the FTC’s opposition, but those expectations were dashed on June 13 when a federal judge granted the FTC’s request to issue a restraining order to block the deal. Microsoft’s attorneys will be allowed to argue on behalf of the acquisition in a hearing scheduled to take place in San Francisco in the last week of June. The FTC petitioned a federal court to issue an injunction because its own administrative court lacks the authority to block the deal.
Antitrust issues
When mergers and acquisitions involve industry giants, they are often opposed by regulatory agencies like the FTC and the CMA to prevent monopolies and encourage competition. Activision Blizzard publishes the “Call of Duty” series, which has been among the world’s most popular online gaming brands for over a decade. Microsoft has vowed to make “Call of Duty” titles available to cloud gaming providers, and the company recently announced that it had signed a 10-year agreement to make the popular first-person shooter games available on Nintendo platforms.
Microsoft faces an uphill battle
Microsoft’s acquisition of Activision Blizzard has been approved by the European Union and countries including Japan, Brazil and South Africa. Still, it has been blocked by the CMA in the U.K. and is fiercely opposed by the FTC in the United States. Microsoft will have an opportunity to argue in favor of the acquisition in a federal court in June and an FTC administrative court in August. Still, the chances of the deal being approved in the United States appear slim.
