FTC May Drop Case Against Microsoft, Activision’s $69 Billion Deal: What It Means for Gamers

The US Federal Trade Commission is reportedly planning to drop its case against Microsoft’s $69 billion acquisition of game publisher Activision Blizzard, bringing the Xbox maker one step closer to completing the deal.

FTC Secretary April Taber on Thursday ordered a stay of the case, which was scheduled to be heard before the agency’s administrative law judge on Aug. 2, according to a Reuters report. It comes a week after the Federal Trade Commission lost its appeal in federal court to temporarily block the Microsoft-Activision deal from proceeding until the commission’s administrative law process is complete.

Microsoft first revealed plans to acquire Activision in January 2022. Closing the deal would make Xbox maker Microsoft one of the top three video game publishers, just behind rival Sony. Activision Blizzard is one of the biggest third-party publishers, with some big franchises that will give a much-needed boost to Microsoft’s game catalog, including Call of Duty, Candy Crush and Overwatch.

Microsoft has until October 18 to finalize its deal with Activision. The two companies moved the deadline to October from the original date of July 18, giving more time to get regulatory approval. If the deal is not completed, there is a termination or “breakup” fee that must be paid by Microsoft to Activision. The fee is $3 billion, but increases to $3.5 billion on Aug. 29 and then to $4.5 billion if the deal doesn’t close by Sept. 15. Microsoft President Brad Smith said in a tweet on Wednesday that the companies were “confident in our prospects for getting this deal across the finish line.”

Although Microsoft has won several merger battles, there are still hurdles to overcome. Here’s what you need to know about the deal and what it means for gamers.

Who is left to approve the deal?

Microsoft still needs to convince British regulators to sign off on the acquisition. In April, the UK’s Competition and Markets Authority blocked the $69 billion deal, saying it would lead to higher prices and fewer choices for gamers.

Microsoft’s appeal against that decision says the CMA “made fundamental errors in its calculation and assessment of market share data for cloud gaming services by failing to take into account the limitations of native gaming (where gamers access games installed on their devices via digital download or physical disc).”

The CMA will review the deal and make a decision by the week of August 7, according to Reuters.

In the US, the FTC opposed the deal, saying the acquisition would harm competition in the video game industry. But so far his challenges have been unsuccessful.

Earlier this month, a federal judge refused to issue a preliminary injunction that would have stopped the deal. The Federal Trade Commission (FTC) sought to temporarily halt the merger pending a separate internal administrative proceeding. The FTC now reportedly plans to drop that domestic case. In the past, the FTC has declined to oppose deals if a federal judge declined to issue an injunction.

Microsoft continues to deny that the deal will hinder competition in the video game industry. It has already received approval from the EU, China, Japan and other major countries.

What does this deal mean for gamers?

For Xbox Game Pass subscribers, the merger would mean Activision Blizzard’s catalog of games would be included in the service, presumably similar to how Bethesda games were when Microsoft acquired this company in 2020.

It’s less clear how gamers who don’t have an Xbox and use a Sony PlayStation or Nintendo Switch console instead will be affected. Critics of the deal are concerned that Microsoft could make future games developed by Activision unavailable on competing consoles. (Microsoft did this for games developed by Bethesda.) This is especially worrisome for a big Activision title like Call of Duty.

Microsoft has already agreed to a 10-year deal with Nintendo to bring Call of Duty games to its consoles, but Sony reportedly rejected a similar deal when it presented it last year.

Sony is still opposed to the acquisition and has filed documents with regulators regarding its concerns about the deal. On Sunday, Xbox boss Phil Spencer said Microsoft and Sony had agreed to a 10-year “binding agreement” to keep Call of Duty on the PlayStation platform. It’s unclear whether the latest agreement is different from the one Microsoft offered Sony last year.

Earlier this year, Microsoft struck a 10-year deal with Nvidia that ensures Nvidia’s GeForce Now cloud gaming platform continues to have access to games from Microsoft and Activision.

Microsoft is using these agreements with its competitors to show regulators that there will be no lack of competition in the video game industry.