Microsoft Threatens To Walk Away From $70b Activision Blizzard Deal

The acquisition of videogame maker Activision Blizzard by Microsoft has encountered a new development as the deal faces delays. Microsoft has issued a threat to abandon the $70 billion acquisition if a federal judge grants an injunction that would postpone the deal’s closure.

The U.S. Federal Trade Commission (FTC) argued in federal court for a preliminary injunction to temporarily block Microsoft’s acquisition of Activision Blizzard. The FTC expressed concerns that the acquisition would grant Microsoft the power and incentive to harm competition in various markets.

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Microsoft’s lead lawyer, Beth Wilkinson, emphasized the significance of the ongoing legal proceedings, stating that the outcome would determine the fate of the deal. She warned that a loss could lead to a lengthy administrative ordeal that could potentially derail the transaction, which Microsoft aims to complete by July 18.

The hearing in the U.S. District Court in San Francisco holds high stakes, as the FTC presents its case against Microsoft’s acquisition of Activision. The FTC argues that this merger, along with Activision’s popular games such as Call of Duty, would have dire consequences for the video game industry, enabling Microsoft to stifle competition.

FTC lawyer James Weingarten asserted that if the deal goes through, the combined company would likely have the ability and incentive to harm competition in various markets related to consoles, subscription services, and cloud gaming. The FTC seeks a judge’s intervention to prevent Microsoft and Activision Blizzard from finalizing their $69 billion merger until the agency’s internal court can rule on the matter and assess the potential impact on competition in the video game industry.

Weingarten further noted that Microsoft might choose to make Activision’s titles exclusive to the Xbox console or diminish their quality on competing systems in order to entice gamers to choose Xbox. He cited Microsoft’s acquisition of ZeniMax Media in 2020 for $7.5 billion, after which it declared some of those games as Xbox-exclusive.