FTC’s Move on Microsoft
The Federal Trade Commission (FTC) has filed a temporary restraining order and preliminary injunction to prevent Microsoft’s acquisition of Activision Blizzard before the deal’s July 18 deadline. The FTC is concerned that Microsoft’s ownership of Activision would grant it the ability to control and manipulate the availability and pricing of Activision’s gaming products. The fear is that Microsoft could restrict popular games, such as Call of Duty, from launching on competing consoles or charging higher prices for games on those platforms, potentially diverting buyers away from rivals like Sony. The FTC argues that reversing any negative effects would be difficult if the merger were allowed to proceed before the case concludes.
The deadline for the deal coincided with the hearings of the FTC and the UK’s Competition and Markets Authority, which had previously blocked the acquisition. However, European Commission regulators had already cleared the deal. Microsoft announced its intention to acquire Activision Blizzard for $68.7 billion in January 2022, with an expected completion date by the end of June 2023. If the acquisition falls through, Microsoft could face a termination fee of up to $3 billion. The FTC filed a lawsuit in December 2022 to block the deal, opting for an internal administrative process. A hearing on the case is scheduled to begin on August 2. Microsoft and Activision Blizzard expressed their readiness to present their cases in federal court, with Microsoft’s President Brad Smith highlighting the potential for increased choice and competition in the market. Activision Blizzard CEO Bobby Kotick welcomed the FTC’s decision to bring the matter to federal court and stated that the company’s legal team had prepared for this scenario for over a year. What do you think about Microsoft and the FTC? And what do you think will happen with the case?
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.