Gaming Giants Clash: In a pivotal legal confrontation, U.S. antitrust enforcers are mounting a challenge against a federal judge’s approval of Microsoft’s monumental $69 billion acquisition of Activision Blizzard, renowned for producing the popular “Call of Duty” franchise. The Federal Trade Commission (FTC) contends that the judge applied an excessively stringent standard, arguing that raising serious competitive concerns should be sufficient grounds to reconsider the deal’s approval.
Microsoft successfully concluded the acquisition, initially proposed in January 2022 and heralded as the largest in the gaming industry’s history, on October 13 of the same year. This came after obtaining the necessary regulatory nod from British authorities. However, the FTC is set to present its case before a three-judge appeals court panel in California, asserting that the lower-court judge’s expectations were too high, effectively demanding the FTC to prove that the deal was explicitly anticompetitive, whereas the standard should be whether the deal raises substantial competitive concerns.
The FTC’s uphill battle is exacerbated by its loss in the lower court, and the EU and UK have approved the deal. This legal battle is part of the Biden administration’s effort to stop mergers and price spikes that could affect consumers in pharmaceuticals and airlines. One aspect of the FTC’s argument is that the judge erred in relying on agreements that Microsoft struck with competitors for game distribution to substantiate the claim that the merger wouldn’t harm competition.
Read More: Microsoft 69 Billion Dollar Activision Blizzard Acquisition: A Gaming Industry Odyssey
The FTC filed a lawsuit in December 2022, aiming to halt the deal, contending that Microsoft would leverage Activision’s popular games to stifle competition for its Xbox consoles and establish dominance in rapidly expanding subscription and cloud gaming markets. However, a federal judge in California ruled in July that the FTC failed to make a compelling case.
Microsoft is anticipated to counter the FTC’s arguments by asserting that the agency has not demonstrated any errors in the judge’s ruling. Furthermore, Microsoft contends that the FTC has not provided evidence to support the claim that the company had an incentive to withhold “Call of Duty” from rival gaming platforms.
The panel of judges scheduled to adjudicate the case comprises Daniel Collins and Danielle Forrest, both nominated by former President Donald Trump, along with Jennifer Sung, nominated by President Joe Biden. The outcome of this legal battle will have far-reaching implications, shedding light on the regulatory scrutiny surrounding major mergers in the tech and gaming sectors.
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