Will the FTC Succeed in Blocking Microsoft's Acquisition of Activision Blizzard?

The proposed acquisition of Activision Blizzard by Microsoft is facing significant regulatory hurdles, with the US Federal Trade Commission (FTC) filing a lawsuit to block the deal. Although the FTC does not have the authority to approve or reject mergers, the lawsuit could lead to the deal being blocked by US courts if the FTC's concerns are upheld. The FTC has expressed concerns that Microsoft may make the popular Call of Duty franchise exclusive to its own ecosystem, citing the company's decision to do the same with upcoming Bethesda titles. This move is part of a broader crackdown on large tech mergers. Two legal experts, David B. Hoppe and Richard Hoeg, shared their thoughts on the matter with GamesIndustry.biz. Hoppe noted that the FTC's complaint is in line with its strategy of expanded antitrust enforcement, which includes actively reviewing 'vertical' mergers. These types of mergers involve companies that are not direct competitors but are at different points in an industry stack. Hoeg added that the primary motivation behind the FTC's lawsuit is its increasing emphasis on aggressive enforcement of antitrust laws, particularly with regards to large technology companies. Microsoft has been preparing its defense, with company president Brad Smith writing about the vision behind the deal and Xbox boss Phil Spencer promising to make Call of Duty available on Nintendo consoles and Steam for ten years if the deal is approved. However, many are skeptical about Microsoft's arguments in favor of the merger. Hoeg believes it will be difficult for the FTC to prevail in court, as the commission would need to claim that Nintendo's success with the Switch is not part of the relevant market. Hoppe, on the other hand, has less faith in Microsoft's arguments and thinks the FTC's complaint is stronger than the company's defense. The dispute between the FTC and Microsoft/Activision is still in its early stages, making it challenging to predict the outcome. Both legal experts believe Microsoft would defeat the FTC's complaint, but the process could be lengthy and costly. The US Supreme Court's decision in the case of Axon Enterprise vs the FTC could also impact the outcome, as it may challenge the ability of agencies like the FTC to handle adjudicative processes outside of federal courts. The penalty fee for Microsoft to abandon the acquisition is set to increase in the coming months, with the company facing a $2 billion fee before January 18, 2023, and a $3 billion fee by April 18. Other regulators, such as the UK's Competition and Markets Authority (CMA) and the European Union, are also scrutinizing the deal, which could further complicate the process. Ultimately, the question remains whether the acquisition will go through and Activision Blizzard will become part of Microsoft.