A US judge has granted a temporary restraining order to block Microsoft's proposed $69 billion takeover of Activision Blizzard, following a request by regulators.
The court determined that the order is necessary to maintain the status quo while the complaint is pending. The US Federal Trade Commission (FTC) raised concerns that the deal could lead to reduced competition in the industry.
A two-day hearing has been scheduled for June 22nd in San Francisco to further examine the matter. The acquisition, which would be the largest in the history of the video games industry, has sparked diverging opinions among competition regulators in the UK, US, and Europe.
While the European Union has approved the deal, the UK has blocked it. Approval from regulators in all three regions is required for the deal to proceed.
The FTC argued that the acquisition would grant Microsoft's Xbox console exclusive access to Activision games, potentially leaving competitors such as Nintendo and Sony at a disadvantage.
Microsoft and Activision have until June 16th to submit legal arguments opposing the preliminary injunction, and the FTC will have an opportunity to respond by June 20th.
Microsoft has maintained that the takeover would benefit gaming companies and players. In an effort to address concerns, Microsoft has offered to sign a legally binding agreement with the FTC, ensuring that Call of Duty games are provided to competitors, including Sony, for the next decade.
While the European Commission approved the acquisition, citing Microsoft's offer of 10-year free licensing deals that guarantee access to Activision's games for European consumers and cloud game streaming services, the UK's Competition and Markets Authority (CMA) blocked the deal in April.
The CMA expressed concerns about reduced innovation and limited choice for gamers. Microsoft and Activision have expressed their intention to appeal the CMA's decision.
Microsoft President Brad Smith referred to the FTC's announcement as the company's "darkest day" in its four decades of operation in Britain.
In response to the FTC's actions, Smith expressed appreciation for the opportunity to present their case in federal court and highlighted Microsoft's belief that expediting the legal process in the US would ultimately foster more choice and competition in the market.
The potential acquisition of Activision, known for its popular games such as Candy Crush, holds significance for Microsoft as it seeks to narrow the gap with its main competitor, Sony.
This move by Microsoft is seen as a strategic investment in the future of video games, particularly its Xbox Game Pass service, often referred to as the "Netflix of games."
Microsoft envisions a future where players subscribe to game libraries and stream games through cloud gaming, shifting away from individual game purchases, which is currently the dominant model.
