March 5, 2024

FTC May Pause Microsoft Activision Blizzard Acquisition Trial to Pursue Settlement Talks

Highlights

  • The FTC is likely to halt its trial with Microsoft over its acquisition of Activision Blizzard to pursue settlement talks, following pressure from lawmakers.
  • The federal court victory by the FTC is seen as a major blow to its efforts to block the deal, allowing Microsoft to proceed without express permission.
  • Settlement talks between Microsoft and the FTC could be opportune, and the regulator’s pause in the administrative case suggests they are willing to negotiate concessions.

The Federal Trade Commission is likely to put its internal trial on hold Microsoft more than the tech giant’s acquisition of Activision Blizzard in an attempt to enter into settlement talks, according to a new report. This change of heart is in line with growing pressure from lawmakers on the FTC to stop the Microsoft Activision Blizzard deal.

After a week-long hearing in late June, the Ninth Circuit Court of Appeals rejected the FTC’s attempt to block Microsoft’s acquisition of Activision Blizzard on July 14. Although the regulator is still in the midst of an internal trial regarding the acquisition, its federal court defeat was widely interpreted as a fatal blow to its chances of preventing the deal from going through.

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The FTC has now suspended an administrative challenge to the deal that was scheduled for an in-house trial in August, Bloomberg reports, citing regulatory filings. This turn of events opens the doors to settlement talks between Microsoft and the FTC. Meanwhile, the agency is still appealing the federal court’s ruling approving the deal, but seeing as how its previous request for an injunction was denied, Microsoft could apparently close the acquisition without the express approval of the FTC. Given that situation, the regulator’s decision to suspend its administrative case against the $68.7 billion acquisition could be interpreted as a sign that the FTC is now open to negotiating concessions from Microsoft instead of continuing to oppose the deal outright.

Assuming that settlement talks are indeed on the horizon, such discussions are likely to be quite opportune, especially since Microsoft has already missed its July 18 deadline to close the deal. In response to that development, Microsoft and Activision Blizzard agreed to extend the acquisition deadline by another three months earlier this week.

In exchange for his continued cooperation, the Call of duty the maker managed to raise the previously agreed exit fee of $3 billion by another $500 million. Additionally, if the deal is terminated after September 15, the breakup fee Microsoft will have to pay Activision Blizzard will rise to $4.5 billion. For added context, that amount represents Activision Blizzard’s most successful year ever, which was 2021, when the company reported $3.16 billion in profit.

Apart from the FTC challenge, the acquisition is still facing regulatory pushback from Britain’s Competition and Markets Authority. Microsoft already appealed against the United Kingdom’s rejection of the Activision Blizzard deal in late May, and the final decision in those proceedings is expected to come by the end of the summer.

MORE: The Biggest Bombshells from the FTC v. Microsoft

Source: Bloomberg

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