Later on Wednesday local time, U.S. antitrust enforcers will continue to defend Microsoft's bid to acquire Activision Blizzard. Previously, a judge had ruled that the deal did not violate U.S. antitrust laws. In January 2022, Microsoft announced that it would acquire Activision Blizzard for US$69 billion, which is the largest acquisition transaction in the history of the gaming industry. On October 13 this year, after receiving approval from British regulatory agencies, Microsoft announced the formal completion of the transaction.
But later today, the Federal Trade Commission (FTC) is expected to argue to a three-judge California appeals court panel that the lower court judge set the bar for appeals too high, effectively requiring the FTC to prove the deal was anticompetitive.
Currently, the FTC is facing an uphill battle because it has already lost its case in lower courts and the EU and UK have already approved the deal.
The legal battle is also part of the Biden administration's broader effort to crack down on mergers and price hikes that impact consumers in areas ranging from drugs to airline tickets.
Additionally, the FTC is expected to argue that the judge erred in relying on Microsoft's game publishing agreement with a competitor (Ubisoft) as evidence that the merger would not harm competition.
In December 2022, the FTC filed a lawsuit against the deal, saying that Microsoft would use Activision Blizzard's popular games to suppress its Xbox console competitors and dominate the fast-growing subscription and cloud gaming business.
But in July this year, a federal judge in California ruled that the FTC failed to prove its grounds for prosecution.
For its part, Microsoft is expected to claim that the FTC failed to prove that the judge's previous ruling was wrong. Additionally, it will argue that the FTC failed to prove that Microsoft had a motive to remove Call of Duty from rival gaming platforms.
Microsoft's acquisition of Activision Blizzard is significant. After the transaction is completed, Microsoft has become the third-largest gaming company in the world by revenue, behind Tencent and Sony.
Venture capital firm Konway believes that Microsoft's acquisition of Activision Blizzard will trigger more mergers and acquisitions in the global game market and create a new generation of game companies.