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FTC Appeal Threatens Microsoft’s Acquisition of Activision Blizzard

  July 14, 2023

In a surprising turn of events, the Federal Trade Commission (FTC) has filed an appeal against the recent court decision that denied a preliminary injunction to block Microsoft’s acquisition of Activision Blizzard. As a result, NASDAQ exchange will delist Activision Blizzard’s stock. So, there is a buzz of anticipation among investors. Let’s dive into the details and understand the potential consequences of these developments.

FTC Appeal Challenges Microsoft’s Acquisition

The FTC has taken a stand against Microsoft’s acquisition of Activision Blizzard, and their appeal is causing quite a stir. The request was filed on the same day that NASDAQ announced the delisting of Activision Blizzard from its stock exchange. This action is set for Monday, July 17, to make way for Microsoft’s anticipated takeover on July 18.

Both companies are monitoring the situation because if the deal fails to close by the 18th, Microsoft may have to pay a hefty sum of $3 billion to Activision Blizzard and renegotiate the acquisition terms.

Potential Hurdles and Deadline

The deal may not go through smoothly. The FTC could request the appeals court to extend the temporary restraining order against Microsoft. Consequently, it will create uncertainty until the court decides on the appeal.

The temporary restraining order will expire on July 14. However, if the appeals court does not extend it, Microsoft will be free to proceed with the acquisition of Activision Blizzard by the July 18 deadline.

Global Approvals and UK’s Concerns

The merger has received approvals from the European Union and 39 countries, with the UK being the main holdout. Microsoft is actively working with the Competition and Markets Authority (CMA) to address their concerns and modify the acquisition agreement to ensure mutual satisfaction. Collaboration between the two parties is vital to resolve any outstanding issues.

Implications of a Successful Deal

If Microsoft successfully finalizes the acquisition, it will become the third-largest video game publisher globally. Basically, this transformative move would position Microsoft as a major player in the gaming industry, opening up new opportunities for innovation and growth.

The ascent of Microsoft as the third-largest video game publisher globally would have significant implications for the gaming industry. Let’s explore some potential outcomes:

Diversification of Gaming Experiences:

With Microsoft‘s vast resources and expertise, and diverse gaming experiences, they can offer more to players. They could invest in creating new and unique game genres.

Limited Consumer Choice:

Generally, less competition can restrict consumer choice. A dominant player like Microsoft could have a stronger influence over the availability and pricing of games. It might limit the variety of titles and platforms available, potentially leading to fewer gaming options.

Enhanced Titles: 

As a major publisher, Microsoft would have the means to invest in and develop high-quality titles. This could lead to a broader and more impressive lineup of exclusive games for their platforms.

Higher Prices:

In a less competitive market, prices for games and gaming-related services could rise.

Platform Development and Integration:

Microsoft’s position could drive platform development and integration advancements. Furthermore, they could leverage their expertise to enhance cross-platform play, seamless integration between console and PC gaming, and the integration of cloud gaming services. All this would give gamers greater flexibility and convenience in accessing their favorite games.

Potential Monopolistic Practices:

If a single company holds significant control over the industry, there is a risk of monopolistic practices. Evidently, this could include anti-competitive behaviors such as exclusive deals that limit access to certain games or platforms.

Industry Partnerships and Collaborations:

Microsoft’s increased stature would likely attract more industry partnerships and collaborations. They could form alliances with talented game developers, studios, and other publishers to create exciting new projects.

Balancing Competition and Consolidation

The ongoing FTC appeal and the impending delisting of Activision Blizzard‘s stock from NASDAQ have injected a dose of excitement into the Microsoft-Activision Blizzard merger. However, the outcome of these developments remains uncertain, and at this time, both parties are working towards a resolution. As the gaming community and investors eagerly await the final verdict, the industry holds its breath, hoping for a decision that will shape the future of gaming and competition.

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