US FTC tries again to stop Microsoft’s already-closed deal for Activision

By Diane Bartz

WASHINGTON (Reuters) – U.S. antitrust enforcers will argue on Wednesday that a federal judge got it wrong when she ruled that Microsoft (NASDAQ:)’s $69 billion deal to buy “Call of Duty” maker Activision Blizzard (NASDAQ:) was legal under competition law, in their latest attempt to stop the deal.

Microsoft closed the deal, originally proposed in January 2022 as the biggest acquisition in the history of the gaming industry, on Oct. 13 of this year after obtaining the approval of British regulators.

The Federal Trade Commission, however, is expected to tell a three-judge appeals court panel in California that the lower-court judge held the agency to too high a standard, effectively requiring it to prove that the deal was anticompetitive when the standard is simply that the deal raises serious competitive concerns.

The FTC is fighting an uphill battle, given that it lost the lower-court fight and that the EU and Britain have signed off on the deal.

The legal battle is part of a broader push by the Biden administration to fight mergers and price hikes that affect consumers in areas ranging from medicines to airline tickets.

The FTC is also expected to argue the judge was wrong to rely on deals that Microsoft struck with rivals to distribute games as proof the merger would not hurt competition.

The FTC filed a lawsuit aimed at stopping the deal in December 2022, arguing that Microsoft would use Activision’s popular games to suppress competition to its Xbox consoles and dominate fast-growing subscription and cloud gaming businesses. But a federal judge in California ruled in July that it failed to make its case.

Microsoft is expected to argue that the FTC has failed to show that the judge erred in her ruling. It will also contend that the agency failed to show that Microsoft had an incentive to withhold “Call of Duty” from rival gaming platforms.

The judges on the panel are scheduled to be Daniel Collins and Danielle Forrest, both nominated by former President Donald Trump, and Jennifer Sung, nominated by President Joe Biden.