On Wednesday, the Federal Trade Commission (FTC) announced its plans to appeal a decision that allowed Microsoft to acquire the gaming giant Activision Blizzard for $69 billion.
The FTC’s effort to block the merger came seven days ahead of the court-agreed injunction expiry date this weekend, which is the only obstacle standing in the way of the deal.
The FTC’s request for an injunction against Microsoft had been denied by a U.S. Federal District Court Judge, Jacqueline Scott Corley, earlier this week. Citing a lack of evidence, Judge Corley had stated that the deal was beneficial for both competition and consumers.
“The Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition,” Judge Corley wrote in her ruling.
Responding to the appeal, Brad Smith, Microsoft’s Vice Chair and President, said, “We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”
The agreement between Microsoft and Activision Blizzard is due to expire on July 18th, and according to executives, Microsoft is unlikely to request an extension unless it feels the relevant legal obstacles have been cleared.
If the injunction were to expire before the deal closes, Microsoft would have to pay Activision Blizzard a reverse termination fee of $3 billion. Microsoft also has to secure approval from the UK’s Competition and Markets Authority (CMA) before reaching the July 18th deadline.
The CMA announced a surprise statement on Wednesday warning Microsoft about the implications of offering to restructure its deal. “The outcome of the restructuring may lead to a new merger investigation which is likely to be conducted within a much tighter timescale,” the statement read.
The CMA, which had initially opposed the Microsoft-Activision Blizzard transaction, had earlier agreed to pause its litigation with Microsoft in order to negotiate a settlement.
Read more: Major Setback for FTC as Judge Clears Microsoft’s Acquisition of Activision Blizzard
At the time, reports suggested Microsoft and the CMA had reached a “small divestiture” agreement to address the company’s cloud gaming concerns. However, this was corrected to clarify that Microsoft had only proposed “small and discrete divestiture” that the CMA has yet to accept.
EU regulators had raised similar concerns with the deal but eventually approved it, thanks to Microsoft’s commitment to offering a 10-year licensing deal to its competitors.
The proposed merger between Microsoft and Activision Blizzard had been announced in January 2020 and has since had its fair share of scrutiny from global regulators.
Speaking on the planned acquisition, Bobby Kotick, CEO of Activision Blizzard said, “I’d be surprised if they would waste taxpayer resources on something like that”.
Meanwhile, a spokesperson for Activision Blizzard said in a statement the company is “confident the U.S. will remain among the 39 countries where the merger can close” and they looked forward “to reinforcing the strength of our case in court, again.”
