Judge temporarily prevents Microsoft from completing its $69 billion acquisition of Activision Blizzard

Microsoft’s planned, record-breaking $69 billion acquisition of video game company Activision Blizzard was blocked by a federal judge on Tuesday, allowing more time for an antitrust investigation into the deal.

U.S. District Judge Jacqueline Scott Corley in San Francisco ruled in support of a temporary restraining order filed by the Federal Trade Commission that will prevent Microsoft from closing the deal.

In a lawsuit filed Monday, the commission sought both a restraining order and a court order to stop Microsoft’s acquisition of the California company behind popular games like Call of Duty, World of Warcraft and Candy Crush Saga.

Microsoft, creator of the Xbox game system, has been trying for months to get global approval for the merger.

While a number of countries have approved the acquisition, regulators from two major economies – the US and the UK – have taken action to stop the acquisition, arguing that it could stifle competition in the video game market.

“We welcome the opportunity to take our case to federal court,” Microsoft president Brad Smith said Monday.

“We believe that speeding up the legal process in the US will ultimately bring more choice and competition to the market,” he added.

Judge Corley said her order to temporarily block the deal is “necessary to maintain the status quo” while Federal Trade Commission lawsuits against it are still pending.

The bar for issuing an urgent restraining order is lower than for issuing a preliminary injunction blocking the deal. A hearing on the commission’s request for an injunction is scheduled for June 22.

The ruling came a day after the FTC asked a federal court to prevent Microsoft from completing its blockbuster purchase of Activision Blizzard as it considers regulatory action.

“A preliminary injunction is necessary to prevent … preliminary damages,” while the FTC determines whether “the proposed acquisition violates U.S. antitrust law,” the regulator said in the filing.

Tuesday’s ruling bars Microsoft from moving forward with the deal before the court decides whether to issue a preliminary injunction requested by regulators.

The FTC took Microsoft to court last year to block the merger, but that case was referred to the U.S. agency’s internal judge in a trial that begins Aug. 2.

Lina Khan, an antitrust academic who advocated breaking up the biggest tech companies before being nominated for the job by President Joe Biden in 2021, is FTC Commissioner

U.S. District Judge Jacqueline Scott Corley in San Francisco ruled in support of a temporary restraining order filed by the Federal Trade Commission that will prevent Microsoft from closing the deal

The Activision Blizzard booth at the Electronic Entertainment Expo, June 13, 2013, in Los Angeles

The commission said it took its case to federal court this week because it was concerned that Microsoft would try to close the deal on short notice before the trial begins, which would make it “difficult, if not impossible” to veer off course. change if the takeover were to take place later. found illegal.

The regulator is led by Lina Khan, an antitrust academic who advocated breaking up the largest tech companies before being nominated for the job by President Joe Biden in 2021.

Khan has accused Meta, Facebook’s parent company, of stifling competition by buying up startups, and the FTC has investigated Amazon.

The US Department of Justice, meanwhile, has filed lawsuits alleging that Google has violated antitrust rules in both online search and advertising.

It is usually easier to win a case to block a merger by going through an in-house FTC judge rather than a U.S. district court, but an FTC judge cannot issue a preliminary injunction to prevent a deal from closing. Closed.

Microsoft has agreed in recent weeks to allow Ubitus and Boosteroid access to Activision games on their cloud-based video game streaming services for 10 years as a way to satisfy the UK’s Competition and Markets Authority.

And it signed a deal with Nintendo that currently has no access to Call of Duty.

Regulators were concerned that Microsoft would only keep Activision games on their Game Pass subscription service, negatively impacting competitors launching their own cloud gaming services.

Microsoft has made concessions to appease regulators, including allowing Nintendo to sell Call of Duty

Regulators were concerned that Microsoft would keep Activision Blizzard games only on their Game Pass subscription service, negatively impacting competitors launching their own cloud gaming services

In April, the CMA said it was concerned only with cloud competition issues and not the console market where Microsoft competes with Sony’s PlayStation.

Microsoft CEO Brad Smith said publicly that Khan’s FTC did not want to talk about these types of adjustments.

The FTC has argued that Microsoft would have too much market power by being a major console maker and owning Activision.

FTC points out that 10 of the top 15 console games sold between 2010 and 2019 were Call of Duty games, and that the newest game in the franchise – Modern Warfare II, released in 2022 – in the first ten days of the sales generated $1 billion in sales. release,” law firm Arnold & Porter said in a note to clients.

Xbox owner Microsoft launched a bid for Activision Blizzard early last year, in a bid to create the world’s third-largest gaming company after China’s Tencent and Japanese PlayStation maker Sony.

Although the European Union has given the green light to the deal, Britain’s Competition and Markets Authority (CMA) blocked it in April, arguing it would hurt competition in cloud gaming.