Microsoft Faces Legal Showdown in Bid to Acquire Activision Blizzard for $69 Billion

Microsoft is set to engage in a legal battle with US regulators as it seeks approval to complete its $69 billion takeover of video game maker Activision Blizzard, according to a report by The Washington Post.

This high-stakes showdown will have significant implications for an industry that surpasses the combined size of the movie and music sectors.

Microsoft's Bid to Acquire Activision Blizzard

The clash centers around Microsoft's desire to expand its video game empire beyond its Xbox console and the US Federal Trade Commission's (FTC) attempt to block the deal, arguing that it would hinder competition and innovation and ultimately harm consumers.

This development marks the latest development in a deal that was unveiled 17 months ago. The CEOs of both Microsoft, Satya Nadella, and Activision Blizzard, Bobby Kotick, are expected to testify during the five-day hearings held in San Francisco before US District Judge Jacqueline Scott Corley. The hearings are scheduled to wrap up on June 29.

The FTC's legal team intends to summon experts and a high-ranking executive from Sony, the leading manufacturer of the popular PlayStation video game console.

Their purpose is to illustrate how Microsoft would gain an unfair advantage through the integration of its Xbox franchise with the acquisition of Activision Blizzard.

Following the presentation of all evidence and arguments, Judge Corley will deliberate on whether to green-light the FTC's request for a court order that would suspend the deal until a more extensive administrative trial takes place in Washington, D.C., on August 2.

It is anticipated that the judge will deliver her ruling after the conclusion of the Fourth of July holiday.

Should Judge Corley choose not to issue an injunction, Microsoft would seize the opportunity to finalize the deal prior to the July 18 deadline, effectively avoiding a substantial breakup fee of $3 billion.

What the Legal Dispute Means

The ongoing dispute over the deal highlights the significance of video gaming, an activity that already attracts an estimated global audience of about 3 billion people who play games on consoles, PCs, and smartphones. This market is projected to expand to 4.5 billion individuals by 2030.

Microsoft presents the proposed acquisition of Activision Blizzard as an opportunity to challenge Sony's PlayStation, which currently holds a larger market share.

Microsoft also claims that the deal would bring new benefits to video game players, including a 10-year commitment to make Call of Duty available on Nintendo's Switch console.

The FTC, however, argues that the deal would grant Microsoft excessive power, considering it is already one of the world's wealthiest companies.

Regulators raise concerns that Microsoft may gradually make popular games exclusive to its Xbox console and subscription services, drawing on its handling of titles following the acquisition of ZeniMax Media in 2021.