Microsoft is ready to face the possible lawsuit from FTC - report

A new report from Bloomberg says Microsoft is ready in case the Federal Trade Commission (FTC) files a lawsuit to block the proposed $69 billion Activision deal. Despite this, it is important to note that there’s still no clear confirmation of whether the agency will push for such an action since the commissioners still need to vote. 

According to the person who served as a source for Bloomberg, the FTC is now concluding its probe, and its recommendation is expected to be released “soon.” After that, the agency commissioners would decide if a case would be pushed. Prior to this, a Dealreporter item (via Seeking Alpha) earlier revealed that a staff recommendation by FTC could arrive in the middle of December, while its decision about the deal is expected in January.

Despite the impending arrival of FTC’s plans and actions, the source said that the Redmond company still hasn’t communicated with the FTC regarding possible concessions that will aid in the deal’s approval. It’s worth noting, however, that a recent Reuters report says Microsoft is likely to offer EU antitrust regulators remedies in the coming weeks. According to Reuters, the EU concessions would include a segment pertaining to a “10-year licensing deal to Playstation owner Sony.” Meanwhile, according to the Dealreporter report, Microsoft and Sony held meetings to discuss matters related to PlayStation’s licensing deals for Activision games.

In November, the New York Times also divulged that Microsoft offered to lengthen the former 3-year licensing deal of Sony’s PlayStation with Activision to 10 years. Bloomberg’s source in today’s report commented that the two companies need to figure out some financial terms for the agreement and that Microsoft has already informed the European and UK regulators of the discussions. However, it was stressed that the company still hasn’t come up with an actual remedy proposal since the review process is not yet at that stage. In case finalized, the European Commission concession could be used in front of other antitrust watchdogs around the globe. The Bloomberg report says this is what Microsoft hopes for, though UK’s Competition and Markets Authority (CMA) might demand other actions. Yet, it might be a different story for the FTC. As Bloomberg states, even with a settlement proposed to ease concerns, “Biden’s antitrust enforcers aren’t fond of such agreements.”

The news about the possibility of a lawsuit from the FTC was first reported by Politico, which said the agency “would likely bring a case in its own in-house administrative court.” The two companies need to close the proposed merger by July 2023 without agreement renegotiations, but an administrative lawsuit that will take time to be resolved might prevent them from reaching the target month. An antitrust analyst of Bloomberg Intelligence, nonetheless, stated that Microsoft could prevail in the court battle.

One of the main concerns of regulators regarding the merger is the possibility of Microsoft keeping away Activision games from its rivals in case the deal closes. The CMA can even be recalled citing this Sony-releated concern in its initial probe findings. Nonetheless, Bloomberg’s source said removing Call of Duty on PlayStation wouldn’t be financially practical for Microsoft.

We will share more updates related to this news as the story develops.