The Federal Trade Commission will “likely” move to file an antitrust lawsuit against Microsoft and Activision Blizzard to block the planned $69 billion merger deal between the two companies. This is according to a new Politico report citing “Three [unnamed] People know about it.”
While Politico writes that the lawsuit remains “unsecured,” it adds that FTC employees are “questioning the companies’ arguments” that the deal would not be anticompetitive. The sources also confirmed that “many heavy burdens have been completed” in the committee’s investigation, and that a case could be filed as early as next month.
Sony, the main opponent to the proposed purchase from Microsoft, has publicly argued that the current three-year contractual guarantee to keep bestseller Activision Call of duty The PlayStation franchise is “insufficient on several levels.” In response, Microsoft’s head of Xbox Phil Spencer publicly promised to keep shipping Call of duty Games on PlayStation “as long as there’s PlayStation out there to ship them”. It is not clear whether or not the companies memorialized this show as a legal agreement; The New York Times reported this week that Microsoft has offered “a 10-year deal to keep it.” Call of duty on PlayStation. “
Several statements from Microsoft executives, including Spencer, have indicated that the company is less interested in strengthening its position in the “console wars” and more interested in strengthening its mobile subscription, cloud gaming, and Game Pass offerings. behind Call of dutyPolitico reported that the FTC is concerned about how Microsoft could “leverage unannounced titles in the future to advance its gaming business”.
Microsoft spokesperson David Cody told Politico that Microsoft “is ready to address the concerns of regulators, including the Federal Trade Commission, and Sony to ensure the deal closes with confidence.” “We will continue to track Sony and Tencent in the market after the deal is concluded, and Activision and Xbox will both benefit gamers and developers and make the industry more competitive.”
There are still a lot of speed bumps
Reports of a possible FTC lawsuit add to a growing list of troubling signals about the proposed purchase from various international governments. The European Commission said earlier this month that it was moving into an “in-depth investigation” into the deal. In the UK, a similar ‘phase two’ inquiry hearing by the country’s Competition and Markets Authority is set for next month.
Those international investigations are expected to conclude in March, ensuring that the proposed deal doesn’t close before then, and giving the FTC some time before it has to sue. Any such lawsuit must be approved by a majority of the FTC’s four current commissioners and is likely to begin in the FTC Administrative Court. Whatever the outcome, the legal maneuvering in the case could easily delay a planned merger past the contractual deadline of July 2023, at which point the two companies would have to renegotiate or abandon the deal.
The FTC’s lawsuit in the matter also may be the strongest sign yet of a robust antitrust enforcement regime under the chairmanship of Lena Kahn, a big tech skeptic who was appointed to the post in June. Last July, Kahn announced an antitrust lawsuit against Meta (formerly Facebook) and its proposed $400 million purchase of Inside, makers of the VR fitness app. supernatural.
Three months after Microsoft announced the proposed purchase in January, a group of four senators wrote an open letter urging the Federal Trade Commission to take a closer look at the deal. Last month, the merger news website Dealreporter said FTC employees had expressed “significant concerns” about the deal. And this week, The New York Times cited “two people” in reports that the FTC has reached out to other companies for sworn statements outlining their concerns about the deal, a possible sign of lawsuit preparations.
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