A California federal court issued a temporary restraining order Tuesday blocking Microsoft from closing its nearly $70 billion purchase of video games publisher Activision Blizzard, granting the Federal Trade Commission’s request and pausing a deal that has invited regulatory scrutiny both in the U.S. and abroad.
The Northern District of California federal court ruling halts both Microsoft and Activision from completing the deal, with a hearing on the case scheduled for June 22 and 23.
The temporary restraining order is in place until the court rules on the FTC’s preliminary injunction against the deal, which the agency filed on Monday.
In its filing, the FTC expressed concern that Microsoft and Activision may attempt to “consummate” the deal before its internal court issues a ruling on an antitrust suit brought against the deal by the agency.
What To Watch For
As per the original agreement signed between Microsoft and Activision in January 2022, the deadline for the companies to complete the deal is July 18. The hearings next week mean the firms have less than a month to complete the deal, unless they can agree on an extension. Microsoft will have to pay a $3 billion breakup fee to the game publisher if the deal fails to go through.
Last month, the deal was cleared by the European Union’s antitrust regulators after Microsoft agreed to address their competition-related concerns. The EU body said that Microsoft has agreed to its proposed remedies which include a commitment to license Activision Blizzard’s games to other cloud gaming service providers for at least 10 years. The deal, however, was blocked by the United Kingdom’s Competition and Markets Authority in April over concerns it could stifle the nascent cloud gaming market. Microsoft has appealed this ruling.
Microsoft announced its plan to acquire Activision Blizzard for nearly $70 billion back in January 2022—making it the largest deal in the history of the gaming industry. In an effort to address gamers’ concerns, Xbox chief Phil Spencer said Microsoft had no immediate plans to make Activision’s popular Call of Duty franchise exclusive to its Xbox platform and promised to make the game available on rival Sony’s Playstation consoles as well. Since then, Microsoft has signed deals with various cloud gaming providers and console maker Nintendo to make the popular military shooter and other titles available on the platform. Despite this, the deal has faced opposition from PlayStation maker Sony, who has expressed concerns about Microsoft potentially offering a degraded version of Activision’s games on rival platforms.
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