The FTC Is Trying To Block Microsoft's Merger With Activision
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The Federal Trade Commission on Thursday sued to block Microsoft’s planned $69 billion takeover of video game company Activision Blizzard.
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The deal has come under pressure
The Federal Trade Commission (FTC) to prevent the takeover of Activision Blizzard Inc by Microsoft Corp. filed a lawsuit. Law enforcement said the deal was illegal because it would give Microsoft the ability to control how consumers outside of users of their own Xbox consoles and subscription services access Activision games.
The committee's vote was three to one to allow the lawsuit. The FTC said it filed the complaint as part of the administrative process, rather than taking the case to federal court. The FTC's decision to send the complaint to its in-house judge instead of seeking an urgent federal court order to stop the merger could drag the case out for months. The FTC's challenge may be a test of President Joe Biden's mandate to control big tech mergers.
Microsoft's last major antitrust battle came more than two decades ago when a federal judge ordered it to break up after the company's anti-competitive actions related to its dominant Windows software. This judgment was overturned on appeal, although the court imposed other, less drastic penalties on the company.
Progressive groups are putting pressure on the FTC to block the deal.
Sony has been the most vocal critic of the planned deal with Activision, arguing that it could hurt competition if Microsoft restricts access to Activision's games, especially "Call of Duty".
Microsoft CEO Brad Smith signaled in a Thursday statement that the company was likely to challenge the FTC's actions.
Microsoft has repeatedly said it has no plans to deny Sony and others access to Activision games and that its deal with the company won't hurt competition. The company has publicly pledged to give Sony and Nintendo access to the new "Call of Duty" games on their current hardware. Microsoft said it still believes the deal, which it estimates at $68.7 billion when adjusted for Activision's net cash, will boost competition.
Microsoft is committed to addressing competition issues and presented proposed concessions to the FTC earlier this week.
According to Bloomberg Intelligence analysts, the combined company would control around 11% of the global digital game publishing business.
Microsoft's deal with Activision, which would be its largest ever acquisition, is also being investigated by antitrust authorities in the UK and the European Union.
Microsoft is one of the stocks the deal with Activision Blizzard is focused on. Microsoft’s shares closed up about 1%, while Activision’s shares were down by about 1.5%.
The downtrend, like many other tech stocks, appeared on the MSFT chart. They reached the lowest level at the beginning of November, where they made up for losses in subsequent periods. At the beginning of December, they reached the highest level in the last quarter. MSFT is currently trading at 247.87.
Microsoft shares chart
The last quarter of this year does not look too good for Activision shares.
Activision shares chart
Source: wsj.com, finance.yahoo.com
