In its fight to buy Activision, Microsoft faces another challenge: the pulse of the FTC and the CMA

Microsoft and Activision Blizzard are doing everything they can to close the biggest deal in video game history on time. We are talking about an operation of 69,700 million dollars announced over a year ago which, after being approved by a dozen regulators around the world, still has two major obstacles: the regulators of the United States and the United Kingdom.

It is no secret that a business movement of this size would take time to materialize and would have to be subject to the scrutiny of numerous authorities. It is curious, however, that after overcoming the revisions from actors such as the European Commission (EC) and the State Administration for Market Regulation of China (SAMR)the agreement cannot prevail in two regions.

CMA and FTC, the nightmare of Microsoft and Activision

The UK Competition and Markets Authority (CMA) and the US Federal Trade Commission (FTC) seem hell-bent on blocking the deal between Activision and Microsoft globally. After its analysis and final verdict, the former issued an order to block the merger. But, far from limiting itself to its territory, the CMA tried once again to demonstrate its role as “world police”.

As collected by the BBC, the competition authority noted that as Activision is intertwined across different markets, it cannot be separated for the UK. Consequently, the CMA assured, the blocking decision “prevents the deal from happening globally.” The ambitions about the scope of the measures adopted surprised some, but from a broader perspective they correspond to the position of its new leadership.

As of last year, Sarah Cardell, who had served as the CMA’s general counsel, assumed the role of chief executive with a mission to substantially transform the regulatory body. In his first speech in officeensured that events such as the pandemic and the brexit they gave the UK competition authority “new and expanded powers”, which translated into a “greater global role”.

Here’s one reason the CMA has been locked in a bitter battle with Microsoft. In The Guardian they point out that the body led by Cardell is considered an important player globally because its work is respected by its peers and even its findings are considered consistent regardless of the position that companies may take.

And this isn’t the first time we’ve seen the influence of the CMA. In October of last year he upheld a 2021 ruling and forced Facebook (now Meta) to sell Giphy, a company he had bought for 400 million dollars. And now he is also looking closely at Adobe’s $20 million purchase of Figma.

But, as we say, the desire to demonstrate its authority before the world does not only come from the CMA. The FTC is also on a similar path. The US organization has had a new leader for two years who must demonstrate that she has been able to fulfill her promises. Lina Khan, collects The New York Timesassured that the United States had been permissive with Big Tech for a long time, and promised to change it.

Unlike the CMA, the FTC cannot directly issue blocking orders in cases like the Microsoft-Activision deal. Therefore, as stated on their websitehas to go to federal court. It is at this point where the judge, instead of acting blindly, analyzes the case again, contemplating the position of the parties. And, if he determines that the operation violates the law, he can issue a blocking order.

This same week we learned that Judge Jacqueline Scott Corley rejected an injunction to block the operation promoted by the Redmond company (although the case should continue in court later). For Justice, the FTC could not prove that the agreement would end up reducing competition and harming users. Far from accepting this decision, explains BloombergThe body assured that it will appeal the decision.

It should be noted that this is not the first defeat, albeit partial, suffered by the new leadership of the FTC. In February The court rejected a claim with which he sought to prevent the purchase of a small company of virtual reality called Within by Meta. For many such a move did not violate the law, but Khan’s arguments revolved around protecting consumers even before companies become giants.

The CMA and FTC appear to be taking a much tougher stance that could not only thwart Microsoft, but other tech companies as well. For now, those from Redmond should close the purchase before July 18, the deadline established in the initial agreement if they don’t want to renegotiate the terms with Activision or pay a fine.

From CNBC they point out that Microsoft hopes to reach an agreement with the CMA, possibly including some divestment in the cloud gaming field. The British regulatory body, however, warns that a restructuring of the agreement “could lead to a new investigation.”

The FTC’s appeal, meanwhile, takes the case up to the United States Court of Appeals for the Ninth Circuit. In any case, a race against time is on again. The previous blockade of US justice will be lifted on July 14 at 11:50 pm PT. On paper, and if no other legal action prevents it, Microsoft could close the agreement from that moment and before the aforementioned deadline.

Images: Microsoft | Activision | CMA | FTC

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In its fight to buy Activision, Microsoft faces another challenge: the pulse of the FTC and the CMA

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by Javier Marquez.

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