Microsoft-Activision Blizzard deal temporarily blocked by US judge

A US federal judge has put Microsoft’s $75bn acquisition of Activision Blizzard on hold as the Federal Trade Commission seeks to block the transaction.

A judge in a US district court in California on Tuesday handed down an order prohibiting the closure of the gaming industry’s biggest deal pending an “evidentiary hearing” set for Thursday and Friday next week.

The FTC last year had sued to block what would be Microsoft’s biggest deal yet through its own in-house proceedings. But on Monday it filed a complaint asking the federal court to block the transaction until after those proceedings — set to begin in August — determine whether the tie-up violates US antitrust laws.

The companies have until Friday to submit a brief opposing the FTC’s request.

Microsoft said: “Accelerating the legal process in the US will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.”

Activision pointed to a memo by chief executive Bobby Kotick published on Monday that said the FTC’s complaint was “a welcome update” that “accelerates the legal process”.

The FTC declined to comment on the judge’s order.

The FTC said in Monday’s filing: “With control of Activision’s content, Microsoft would have the ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price, and innovation.”

The regulator has said the complaint was because of media reports suggesting the companies were considering closing the deal “imminently”.

The FTC’s position on the multibillion-dollar deal represents one of the most significant merger challenges to materialise under the Joe Biden administration. The president has appointed several progressive officials in senior antitrust roles who have adopted a tough stance on anti-competitive conduct, including FTC chair Lina Khan.

The UK’s Competition and Markets Authority in April ordered to block the acquisition, in a severe blow to the deal. The regulator argued Microsoft could make Activision’s games exclusive to its own cloud gaming service.

Parting ways from the US and UK, the EU last month cleared the deal, saying Microsoft had made concessions that alleviated regulators’ concerns such as allowing all European consumers who buy a current or future Activision game to stream it on all cloud game streaming providers for a decade.

Additional reporting by Richard Waters and Andrew Edgecliffe-Johnson