FTC appeal: Microsoft Activision deal under threat again
After having its request for a preliminary injunction against the Microsoft Activision deal denied, the US regulator is appealing Judge Corley's decision. And that's just the tip of the iceberg.
The FTC is set to lay out its justification for the appeal against the Microsoft Activision deal today, although the temporary restraining order expires this Friday, so if the appeal isn't granted, the deal could still go through in the US before the Tuesday, July 18 deadline next week. In preparation for the deal going through, Activision is being removed from the NASDAQ (US stock exchange) before markets open on Monday. However, a deal still needs to be struck with the UK's Competition and Markets Authority (CMA).
The Microsoft Activision deal was announced last January coming off the back of its successful acquisition of ZeniMax Media, which closed in March 2021. With Bethesda's stable under its belt, Microsoft could focus on making the studio's future titles platform exclusive – like Starfield – rather than shoring up the holes with its own lack of quality first-party games.
Buying Activision would bring titles like Call of Duty, Overwatch 2, Diablo and more in-house. The relationship Sony has cultivated with Activision to secure platform and timed-exclusive content for the shooter series would fall by the wayside, and if Call of Duty were to be an Xbox exclusive it could spell disaster for PlayStation.
Microsoft made promises to support the franchise on both Nintendo and PlayStation consoles for 10 years, but those assurances weren't enough. From there, Xbox Game Pass and cloud gaming were added to the litany of concerns, and so the drawn-out legal fisticuffs ensued. It culminated in a five-day long battle with Judge Corley denying the FTC's request for a preliminary injunction.
Inside quietest room in the world where no one can stay inside for over an hour
That just leaves the UK's CMA which is holding out over cloud gaming concerns despite EU regulators giving the thumbs up to the Microsoft Activision deal. But, as predicted, the FTC fight is far from over. The FTC has appealed the judge's ruling, and needs the Ninth Circuit Court of Appeals to extend the TRO. And it needs to happen quickly; the TRO expires this Friday, July 14 at 11.59pm PST (Saturday, July 15 2.59am EST/ 7.59am BST). The Micorsoft Activision deal deadline is next Tuesday, July 18 so if the TRO expires before then, the deal is set to close.
Microsoft vice chair and president, Brad Smith, has responded to the news of the FTC's decision to appeal in a statement to The Verge, saying "The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers.
"We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward."
Activision Blizzard’s CCO and EVP of corporate affairs, Lulu Cheng Meservey, also chimed in on Twitter, saying, "The facts haven’t changed. We’re confident the U.S. will remain among the 39 countries where the merger can close.
"We look forward to demonstrating the strength of our case in court - again."
Deal with it
That's not the end of it though – the UK's CMA still has to hash out a version of the Microsoft Deal that it's happy to approve because the current proposed terms aren't cutting it. In a statement to Mirror Gaming, a CMA spokesperson said:
"Whilst merging parties don’t have the opportunity to put forward new remedies once a final report has been issued, they can choose to restructure a deal, which can lead to a new merger investigation. Microsoft and Activision have indicated that they are considering how the transaction might be modified, and the CMA is prepared to engage with them on this basis.
"These discussions remain at an early stage and the nature and timing of next steps will be determined in due course. While both parties have requested a pause in Microsoft's appeal to allow these discussions to take place, the CMA decision set out in its final report still stands."
The Microsoft Activision deal has stirred up all sorts of other questions; given the significance of its impact on gaming, people following the news are wasting no time in trolling and looking for opportunities to whip up drama. As The Verge's Tom Warren reported on Twitter, the FTC's Wikipedia briefly sported a PlayStation logo along with other references to the company, suggesting it has a bias towards Sony's stance in this rigmarole.
On the other side of the aisle, Judge Corley's impartiality has been called into question since it was revealed that her son works at Microsoft (via Tom Warren). Corley actually disclosed this information earlier this year and again at the beginning of the FTC's fight against Microsoft. There would be an issue if Corley's son would be “substantially affected” by her ruling on the deal, but as Warren points out, "he’s working at a company with 200,000+ employees in a non-managerial position that’s not related to Xbox, so it’s unlikely he would be substantially affected."
Call of Duty could be removed from Microsoft's Activision deal
The FTC might bring this up in its appeal, but it would likely be a waste of time given this information. For now, we're all on tenterhooks waiting for the appeal to drop, to see if it's made in time to stop the deal in the US, and how things will unfold with the CMA.
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