A US judge has approved a temporary injunction brought forth by regulatory authorities, halting Microsoft's significant $69bn (£56bn) acquisition of Activision Blizzard. This temporary restraining order, as the court states, is a necessary action to "maintain the status quo while the complaint is pending".
Antitrust Concerns Raised by the FTC
Court Injunction Halts Massive Deal
The US Federal Trade Commission (FTC), the body responsible for enforcing competition law, expressed concerns that the deal could "substantially lessen competition" within the industry. These concerns have led to a two-day hearing scheduled for 22 June in San Francisco.
This deal, which aims to purchase the Call of Duty publisher, is poised to be the industry's largest to date. The FTC announced that without the court order, the deal might have concluded by the end of this week, despite the UK blocking the takeover in April.
Legal Counterarguments: Deadline Looms
Microsoft and Activision Blizzard have a deadline until 16 June to submit their legal counterarguments against the preliminary injunction, and the FTC will be required to respond by 20 June. One of the primary arguments put forth by the FTC is that the deal could potentially give Microsoft's Xbox exclusive access to Activision games, leaving other consoles like Nintendo and Sony's PlayStation in the lurch.
Microsoft’s Case for Acquisition
Microsoft, on its part, argues that the deal will have a positive impact on gamers and gaming companies. They have offered to sign a legally binding agreement with the FTC to provide access to Call of Duty games to competitors, including Sony, for a decade.
International Regulators Divided on the Issue
Microsoft's proposed takeover of Activision has elicited mixed reactions among global regulators. The European Commission has greenlit the acquisition, appreciating Microsoft's offer of 10-year free licensing deals, ensuring European consumers and cloud game streaming services have access to Activicon's games. This move, according to the European Commission, safeguards fair competition in the market.
However, the UK's Competition and Markets Authority (CMA) blocked the deal in April, expressing fears of decreased innovation and reduced choices for gamers. Microsoft and Activision Blizzard were critical of the CMA's decision, stating their intentions to appeal.
The Future of Gaming: A Transformational Approach
This deal is deemed critical for Microsoft, particularly as it tries to narrow the gap with its primary competitor, Sony. However, this investment could be seen as Microsoft's gamble on the future of gaming. The tech giant is heavily investing in its Xbox Game Pass service, which many regard as the "Netflix of games".
Microsoft envisions a future where gamers subscribe to libraries and stream games through "cloud gaming", moving away from the traditional model of one-off purchases. This transition is currently the predominant method of accessing games.
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