© Reuters. FILE PHOTO: The Microsoft logo is seen on a smartphone placed over the Activision Blizzard logo shown in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration
By David Shepardson
(Reuters) – The Federal Trade Commission has asked the court to block it temporarily Microsoft Corporation (NASDAQ:) acquired Activision Blizzard (NASDAQ:) on Monday, in an effort to stop the deal from closing before the government’s lawsuit against the $69 billion deal is heard.
The FTC said Microsoft and Activision have indicated the deal may close as early as Friday and has asked a federal judge to block any final agreement before 11:59 p.m. EST on June 15.
The FTC said the deal, which would be the largest for Microsoft and the largest in the history of the video game industry, would give Microsoft “the ability and increased incentive to block or dilute Activision content in ways that significantly reduce competition.”
Without action by a judge, the FTC said the combined company “could alter Activision’s operations and business plans,” and could allow the software giant access to sensitive business information.
The Federal Trade Commission (FTC), which enforces antitrust law, asked an internal administrative judge to block the deal on antitrust grounds in early December, arguing that it would give Microsoft Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony (NYSE: Group Corp’s PlayStation in the cold.
The European Union in May approved Microsoft’s bid to acquire video game maker “Call of Duty” in a $69 billion deal, but UK competition authorities blocked the takeover in April.
Shares in Microsoft closed up 1.5% Monday, while Activision fell 0.8%.
“We welcome the opportunity to present our case in federal court,” Microsoft President Brad Smith said in a statement. Activision has not commented.
Microsoft said the deal would benefit gamers and game companies alike, and offered to sign a legally binding consent decree with the Federal Trade Commission to make “Call of Duty” games available to competitors including Sony for a decade. Announcing the deal in January 2022, Microsoft said it expected to close in fiscal year 2023, which ends in June.
A spokeswoman for the FTC said, “In light of this, and general reports that Microsoft and Activision Blizzard are considering closing their deal soon, we have filed for a temporary restraining order to prevent them from closing while the review continues.”
The case reflects the muscular approach to antitrust enforcement taken by US President Joe Biden’s administration.
But antitrust experts say the FTC faces an uphill battle persuading a judge to block the deal because of the voluntary concessions Microsoft made to allay fears it could dominate the gaming market.
A trial is scheduled to begin in the Federal Trade Commission’s Internal Administrative Court on August 2.