The US Federal Trade Commission on Thursday will argue in federal court for a preliminary injunction to temporarily block Microsoft’s acquisition of videogame maker Activision Blizzard, stopping the deal from closing before the government’s case against the deal is heard.

Microsoft has said that a temporary block could scuttle the deal. Courts do not usually take into account such real-world consequences. But if the court pauses the deal, Microsoft and Activision will have to agree to extend it past an 18 July termination date built into their original agreement.

In a scheduled five-day hearing before a federal judge in San Francisco, the antitrust enforcer will argue it needs Microsoft and Activision Blizzard to put their US$69-billion merger on hold until the agency’s in-house court gets to rule on whether the combination hurts competition in the videogame industry.

The FTC fears that without action by the federal court, the combined firm “could alter Activision’s operations and business plans” and could allow Microsoft to access sensitive business information.

The administrative hearing within the FTC is set to begin on 2 August.

Resolving the US lawsuit is one of several key antitrust battles Microsoft and Activision have fought around the world to get the deal finalised. Microsoft’s bid to acquire the Call of Duty developer was approved by the EU in May, but British competition authorities blocked the takeover in April.

The FTC has argued that the deal, which would be the largest for Microsoft and the largest in the history of the videogame business, would give Microsoft the “ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition”.

Consent decree

In addition, the FTC, which asked its in-house administrative court to block the deal in December, says the combination would give Microsoft’s Xbox videogame console exclusive access to Activision games, leaving Nintendo consoles and Sony Group’s PlayStation out in the cold.

Microsoft has said the deal would benefit gamers and gaming companies alike, and it has offered to sign a legally binding consent decree with the FTC to provide Call of Duty games to rivals including Sony for a decade.

The hearing will begin on 22 June and progress through to 29 June. Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick are among the witnesses planned for a five-day evidentiary hearing. — Chris Sanders, (c) 2023 Reuters