Microsoft’s Bid to Buy Activision Blizzard Temporarily Halted by Judge as Merger Deadline Nears

Winston Cho
·3 min read
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Microsoft’s $69 billion bid to buy video game publisher Activision Blizzard has been temporarily blocked, allowing more time to review whether the deal violates antitrust laws.

U.S. District Judge Jacqueline Scott Corley found on Tuesday that pausing the merger is “necessary to maintain the status quo” and preserve the FTC’s ability to permanently stop the deal.

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After announcing plans last year to acquire Activision, maker of Call of Duty, Candy Crush and Diablo, Microsoft has been engaged in a worldwide blitz to secure approval of the purchase poised to make the company a gaming powerhouse. It’s been greenlighted in several countries, including the European Union, Japan and China, but the U.K. blocked it due to concerns that it would allow the company to corner the cloud gaming market in a decision that was appealed by Microsoft.

Corley’s decision to issue the restraining order doesn’t weigh in on the merits of the FTC’s bid for a preliminary injunction, which was filed on Monday. It was to give the judge more time to consider the deal since it could close as early as Friday. A two day hearing on the commission’s motion for an injunction is scheduled for June 22. The judge ordered Microsoft not to follow through on the proposed acquisition until after the fifth business day she decides whether an injunction is necessary.

The FTC said that it was forced to sue in federal court because Microsoft and Activision indicated they could close the deal at any time without further notice before its legal challenge is resolved. It initiated in December an administrative proceeding, but that was brought before its in-house judge in a trial set to start Aug. 2. The suit alleges violations of Section 7 of the Clayton Act, which bars mergers and acquisitions that could potentially lessen competition or create a monopoly, and Section 5 of the FTC Act, which prohibits unfair methods of competition.

Under the court’s current timeline, it’s unlikely Microsoft meets a contractually-obligated July 18 deadline to consummate the purchase. It’s unknown whether the company will have to pay a $3 billion breakup fee or if the date was moved back due to the pace of legal proceedings.

In a statement, Microsoft said that a temporary restraining order “makes sense” and stressed that the courts are “moving swiftly.” Activision didn’t respond to a request for comment.

In its suit, the FTC alleged that the proposed transaction would enable Microsoft to stifle competition to Xbox by withholding Activision titles on rival consoles and game subscription services. It pointed to the tech giant’s history of acquiring competitors to suppress competition, including its purchase of ZeniMax, parent company of Bethesda Softworks and maker of The Elder Scrolls, Fallout and Starfield.

Call of Duty, among Activision’s flagship video games, is recognized as one of the most successful entertainment franchises of all time. The most recent installment, Call of Duty: Modern Warfare II released in 2022, took in $1 billion globally in the first ten days following its launch. By comparison, Top Gun: Maverick, the highest grossing film of 2022 domestically, took one month to reach the same threshold.

Microsoft has been sued in separate civil suits from gamers and shareholders looking to block the deal. The gamers pointed to potential scenarios of Microsoft illegally quashing competition by making titles exclusives to Xbox or degrading the quality of games on rival consoles, while the shareholders alleged they were lied to about the impact of allegedly widespread sexual harassment and discrimination against female employees, though that suit has been dismissed.

Corley, who was elevated from a federal magistrate to a district court judge last year, is currently overseeing an antitrust suit accusing energy companies of conspiring to fix the price of gas in California. In August, she found that plaintiffs in the case have standing to bring certain claims that the firms restrained trade.

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