Microsoft Gets Pre-Trial Hearing for Activision Blizzard Acquisition

Key insights

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Key Event

A pre-trial hearing is set for Microsoft's proposed acquisition of Activision Blizzard.

The hearing on January 3, 2023, will address motions and arguments concerning the $69 billion acquisition. This marks a critical step in the legal process.

Hearing Scheduled. Microsoft and the FTC are scheduled for a pre-trial hearing on January 3 to determine the progression of the lawsuit regarding Microsoft's proposed $69 billion acquisition of Activision Blizzard.

FTC's Stance

The FTC filed a lawsuit to block the merger, citing monopoly concerns.

The Federal Trade Commission formally moved to block the transaction in December 2022. The FTC alleges the deal would degrade rivals' access to key content.

FTC Opposition. The FTC filed a lawsuit on December 8, 2022, to block the merger, alleging that the deal would create a monopoly and allow Microsoft to degrade rivals' access to key…

Microsoft's Argument

Microsoft argues the FTC's opposition violates its constitutional due process rights.

The company contends the lawsuit protects Sony's dominant market position rather than the broader gaming market. Microsoft filed a 37-page response to the FTC's claims.

Due Process Claim. Microsoft’s formal response argues that the FTC’s opposition violates its Fifth Amendment due process rights and contends that Sony is attempting to use antitrust laws to protect its own dominant…

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Summary

A federal court has scheduled a pre-trial hearing for January 3, 2023, to address motions and arguments regarding Microsoft’s proposed $69 billion acquisition of Activision Blizzard. This hearing marks a critical step in the legal battle initiated by the Federal Trade Commission (FTC), which formally moved to block the transaction in December 2022. The FTC’s opposition, approved by a 3-1 commission vote, centers on concerns that the merger would create a monopoly and allow Microsoft to degrade or restrict competitor access to major gaming franchises like Call of Duty and World of Warcraft.

In its defense, Microsoft filed a 37-page response arguing that the FTC’s intervention violates its constitutional due process rights. The company contends that the lawsuit serves to protect established market players, specifically Sony, from legitimate competition rather than protecting the broader gaming market. Microsoft maintains that its proposed vertical merger is pro-competitive, citing its efforts to secure 10-year licensing agreements to keep key titles available on platforms such as Nintendo consoles and Steam.

While the FTC continues to challenge the deal in the United States, the acquisition remains under scrutiny by international regulators in the United Kingdom and the European Union. Industry analysts suggest that the FTC faces significant challenges in court, particularly given the remedial measures Microsoft has already proposed to address antitrust concerns. The upcoming hearing will determine the procedural path forward for the litigation as both parties prepare to defend their respective positions on the impact of the merger on the global gaming industry.