US FTC seeks temporary block on Microsoft's $69bn Activision acquisition
Fears Microsoft will start making changes to gaming company's operations before it has concluded its legal review
The US Federal Trace Commission has asked a judge to halt temporarily Microsoft's proposed $69 billion acquisition of games maker Activision Blizzard to allow sufficient time for a proper review.
In a request for a restraining order to a San Francisco court, the competition regulator said that it was afraid that Microsoft and Activision could "consummate the proposed acquisition at any time ... without any further notice to the Commission."
Such a consummation would allow Microsoft to start making changes to Activision's business operations and staff in a way that would be "difficult, if not impossible" to reverse should the regulator ultimately find against the deal.
For that reason, it has applied for an injunction to stop any such move taking place before all the administrative proceedings to judge the legality of the acquisition have been completed.
Microsoft is one of the world's two largest manufacturers of gaming consoles, the other being Sony. The concern is that after acquiring Activision, Microsoft could use its dominant position in both hardware and software to sideline its main rival in consoles, particularly for cloud gaming.
"The proposed acquisition would continue Microsoft's pattern of taking control of valuable gaming content," the FTC filing says.
"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."
Microsoft had originally planned to conclude the deal by 18th July and still appears to be forcing the pace towards that date, despite awaiting an appeal against the UK CMA's decision to block it. According to Bloomberg, citing unnamed sources, Microsoft president Brad Smith visited the UK last week to discuss the issue with the Chancellor Jeremy Hunt. The appeal is due to be heard starting 24th July.
The FTC's hearing into the case is due to begin a week later on 2nd August. The temporary injunction would stop any further moves to merge the two companies before that hearing has concluded.
"A preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition during the pendency of the FTC's administrative proceeding to determine whether the Proposed Acquisition violates US antitrust law," the filing says.
The European Commission has already given the proposed deal a green light, having initially rejected it.
If the merger goes ahead, it will be both the largest ever acquisition by Microsoft and the largest gaming deal in history.
Should it fail to proceed, Microsoft could owe Activision Blizzard a termination fee of up to $3 billion.