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FTC Battles to Halt Microsoft-Activision Deal in Legal Showdown

The Microsoft-Activision deal is on ice as the Federal Trade Commission (FTC) calls for a pause in proceedings, questioning the legality of the merger in a high-stakes court hearing.

Logos of Activision-Blizzard and Microsoft
Logos of Activision-Blizzard and Microsoft

FTC Seeks Injunction Against Mega-Merger

On Thursday, the US Federal Trade Commission (FTC) pleaded in federal court for a preliminary injunction to halt Microsoft's proposed acquisition of video game giant, Activision Blizzard. The government body aims to prevent the deal from closing before its case against it can be heard.

Concerns Over Competition in Gaming Markets

The FTC's lawyer, James Weingarten, expressed concerns that the resulting company from the deal could potentially wield enough power to harm competition in a variety of markets, including consoles, subscription services, and cloud-based gaming.

Postponing the $69 Billion Merger

Arguing for a judge to block the merger worth $69 billion between Microsoft Corp and Activision Blizzard Inc, the FTC insists that the process be delayed until its internal court can determine if the merger threatens competition in the video gaming industry.

Witnesses in The Five-day Evidentiary Hearing

Microsoft and Activision intend to summon Matt Booty, head of Xbox Game Studios at Microsoft, and Sarah Bond, Microsoft's corporate vice president of the gaming ecosystem. Pete Hines, group senior vice president and head of publishing at Bethesda Softworks, a Microsoft subsidiary, will testify for the FTC.

Previous Antitrust Battles and International Reactions

The outcome of the U.S. lawsuit is critical for the deal, marking one of the major antitrust battles that Microsoft and Activision have faced to secure the deal's completion. Although the acquisition was green-lit by the European Union in May, British competition authorities blocked the takeover in April.

Federal Trade Commission Building
Federal Trade Commission Building

FTC's Arguments against the Acquisition

The FTC postulates that the deal - the largest in video game history and Microsoft's biggest ever - would bestow Microsoft with the power to potentially lessen competition by withholding or degrading Activision's content. The merger would also provide Microsoft's Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony's PlayStation in a disadvantaged position.

Microsoft's Rebuttal and Assurance

In contrast, Microsoft maintains that the deal will yield benefits for both gamers and gaming companies. The tech giant is willing to sign a legally binding consent decree with the FTC, assuring the provision of "Call of Duty" games to competitors for the next decade.

Upcoming Court Proceedings

The court hearing is set to continue until June 29, with Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick among the planned witnesses.