FTC reportedly timed its opposition to Microsoft’s Activision deal to manipulate the European Union

What you need to know

• Microsoft’s attempt to acquire Activision-Blizzard for $69 billion is ongoing, with regulators scrutinizing the deal worldwide.
• The US Federal Trade Commission (FTC) recently filed a lawsuit to block the merger, citing Microsoft making games like Starfield exclusive as a sign that the company could not be trusted.
• A new report suggests that the FTC filed its lawsuit to block the Microsoft-Activision merger after learning that the European Union (EU) planned to discuss potential remedy proposals with Microsoft, dissuading it from reaching a settlement.
• Regulators like the EU and the UK’s Competition and Markets Authority (CMA) are expected to make their final decisions in April 2023.

As Microsoft continues its efforts to close its largest ever acquisition deal, the Activision-Blizzard merger faces careful and thorough inspection from regulators around the world. One organization, the US Federal Trade Commission (FTC), recently filed its lawsuit to block the $69 billion deal in December, citing Microsoft’s decision to make upcoming games like Starfield and Redfall exclusive to Xbox and PC as a reason that the firm is not trustworthy (other regulators claimed the FTC was inaccurate as Microsoft never committed to keeping ZeniMax games multiplatform).

However, a new report suggests that the FTC chose to make its case when it did in order to manipulate the European Union (EU), a fellow regulatory authority also scrutinizing the acquisition. According to Bloomberg, the FTC moved to block the merger on December 8 in a direct response to EU officials indicating that they were planning to discuss possible remedies with Microsoft. This information was shared over a call between the two agencies mere hours before the lawsuit was filed.

Sources familiar with the investigations said that the FTC’s suit was a clear message to the EU that the US regulator did not want settlements with Microsoft reached. This occurred despite fact that the EU wouldn’t consider possible solutions until a later date.

The FTC was able to “get out in front of the Europeans in an effort to shape the narrative” by rapidly filing, said Barry Nigro. Previously, Nigro was the No. 2 antitrust official at the Justice Department as Principal Deputy Assistant Attorney General. Currently, he leads the Global Antitrust and Competition Department at Fried Frank Harris Shriver & Jacobson LLP.

Reportedly, the FTC has declined to comment, and the EU has not responded to inquiries about the matter, either. Microsoft repeated President Brad Smith’s earlier statement that “Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers and workers in the tech sector.”

Final decisions from regulators like the EU and the UK’s Competition and Markets Authority (CMA) are expected to come in spring 2023, with the two organizations planning to issue their verdicts on April 11 and April 26, respectively. The CMA is also expected to announce a preliminary decision in late January or at some point in February.

Microsoft has attempted to assuage regulators’ concerns about exclusivity multiple times in the past, with Microsoft Gaming’s CEO Phil Spencer stating that the main draw of Activision-Blizzard for Microsoft is its leading position in the mobile gaming space. Microsoft, Spencer said, wants “to be where players are, especially with franchises the size of Minecraft and Call of Duty.” As a show of good faith, the company also entered a 10 year commitment to bring Call of Duty to Nintendo Switch and Steam. This deal was reportedly offered to Sony for PlayStation as well, though an agreement was never reached.