Microsoft’s $69 billion bid to buy video game publisher Activision Blizzard has been temporarily stalled, allowing more time to assess whether the deal violates antitrust laws.
U.S. District Judge Jacqueline Scott Corley ruled on Tuesday that pausing the merger is “necessary to maintain the status quo” and preserve the FTC’s ability to permanently halt the deal.
After announcing plans last year to acquire Activision, maker of Duty, Candy Crush And Diablo, Microsoft has been involved in a global blitz to gain approval for the purchase that is poised to turn the company into a gaming powerhouse. It has been greenlit in several countries, including the European Union, Japan and China, but the UK blocked it over concerns 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 does not outweigh the merits of the FTC’s bid for a preliminary injunction, filed Monday. It was to give the judge more time to consider the deal as it could close as early as Friday. A two-day hearing on the commission’s request for an injunction is scheduled for June 22. The judge has ordered Microsoft not to proceed with the proposed acquisition until after the fifth business day after it decides whether an injunction is needed.
The FTC said it was forced to file a lawsuit in federal court because Microsoft and Activision indicated they could close the deal at any time without further notice before the legal challenge is resolved. It started an administrative procedure in December, but it was submitted to the internal judge in a trial that will start on August 2. or create a monopoly, and Section 5 of the FTC Act, which prohibits unfair methods of competition.
Under the court’s current timeline, Microsoft is unlikely to meet a contractually mandated deadline of July 18 to complete the purchase. It is not known if the company will have to pay a $3 billion severance payment or if the date has been pushed back due to the pace of legal proceedings.
In a statement, Microsoft said a temporary restraining order “makes sense” and stressed that the courts are “moving quickly.” Activision did not respond to a request for comment.
In its lawsuit, the FTC claimed that the proposed transaction would allow Microsoft to suppress competition with Xbox by withholding Activision titles on rival consoles and game subscription services. It pointed to the tech giant’s history of acquiring competitors to stifle competition, including its purchase of ZeniMax, the parent company of Bethesda Softworks and maker of The Elder Scrolls, Fallout And Star field.
Duty, one of Activision’s flagship video games, is recognized as one of the most successful entertainment franchises of all time. The most recent episode, Call of Duty: Modern Warfare II released in 2022, grossed $1 billion worldwide in the first ten days after launch. For comparison, Top gun: Maverickthe top-grossing film of 2022 domestically, took a month to reach the same threshold.
Microsoft has been sued in separate civil suits from gamers and shareholders seeking to block the deal. The gamers pointed to possible scenarios where Microsoft would illegally destroy competition by making titles exclusive to Xbox or degrading the quality of games on rival consoles, while shareholders claimed they had been lied to about the impact of alleged widespread sexual harassment and discrimination against female employees. that suit was rejected.
Corley, who was elevated from a federal magistrate to a district court judge last year, is currently overseeing an antitrust case accusing energy companies of conspiring to fix California’s gas price. In August, she found that plaintiffs in the case are authorized to make certain claims that the companies restricted trade.