The Federal Trade Commission on Thursday asked an appeals court to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. while it challenges a ruling earlier this week green-lighting the deal.
The FTC on Thursday asked U.S. District Judge Jacqueline Scott Corley to postpone her ruling — which she promptly denied — and also appealed to the Ninth U.S. Circuit Court of Appeals in San Francisco to pause the acquisition “to preserve the status quo” while the case is reviewed, claiming it is likely to succeed in its appeal.
According to the filing, the FTC claims the judge applied the wrong legal standard to its request for a preliminary injunction, and erred in a number of other matters.
The deal is set to close in the coming days, and letting it happen will “irreparably harm the public interest and the FTC,” regulators said.
In a response filed with the court, Microsoft said the FTC “failed to carry its burden on independent, fact-based grounds” and “dragged its heels” before appealing.
“The court has already found that it would be inequitable” to order an injunction that could lead to “the potential scuttling of the merger,” Microsoft said, in asking for the FTC’s request to be denied.
The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
Xbox — with a major videogame publisher — Activision
makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.
Microsoft has pledged to keep “Call of Duty” available to Sony’s
PlayStation console for 10 years, and will make it available for Nintendo’s
Switch and some cloud-gaming platforms.
In her ruling clearing the deal Tuesday, Corley said the FTC did not show “this particular vertical merger in this specific industry may substantially lessen competition.”
Bloomberg News reported late Thursday that Microsoft and Activision are considering giving up some control of their cloud-gaming business in the U.K. to win approval of British regulators, who — if the U.S. appeals court does not act — are the final hurdle to the deal closing on time.
FTC Chair Lina Khan testified on Capitol Hill on Thursday, where Republican lawmakers assailed her actions and sharply criticized her agency’s court losses in trying to block the Microsoft-Activision deal and Meta’s
acquisition of a virtual-reality gaming company earlier this year.