Microsoft's Acquisition of Activision Blizzard Temporarily Blocked by US Federal Court

A US federal court judge has temporarily blocked Microsoft from completing its $69 billion acquisition of Activision Blizzard. The move comes a day after the US FTC (Federal Trade Commission) asked the federal court to prevent any action from Microsoft in buying out the gaming giant.

Judge Edward Davila says the temporary restraining order "is necessary to maintain the status quo while the complaint is pending". According to the FTC, Microsoft's acquisition of Activision Blizzard could "substantially lessen competition" in the sector.

Why is the FTC blocking Microsoft's Acquisition?

A two-day hearing will take place on June 22 and June 23 in San Francisco, which will give Microsoft and the FTC an opportunity to present evidence in the matter. The FTC said that the deal could have been completed as early as the end of this week without a court order.

Microsoft will now have until June 16 to submit legal arguments to oppose a preliminary injunction and the FTC, which is yet to determine if the acquisition violates US antitrust law. An FTC hearing is set for August to argue the merits of the deal.

However, the California judge will have to hear arguments from both sides before agreeing to stop the deal from going through. Microsoft President Brad Smith said, "We welcome the opportunity to present our case in federal court."

"Both a temporary restraining order and a preliminary injunction are necessary because Microsoft and Activision have represented that they may consummate the proposed acquisition at any time," according to the filing.

A summary of Microsoft's acquisition of Activision Blizzard

Microsoft launched a bid to buyout Activision Blizzard last year, seeking to acquire the world's third-largest gaming firm by revenue. Moreover, the deal would be the largest in the history of the video game industry.

However, the FTC argue that the deal would give Microsoft the ability to make Activision Blizzard games exclusive to the Xbox and PC Game Pass users. Users with Nintendo and Sony PlayStation consoles could be hung out to dry if the deal falls through.

More recently, the European Union greenlit the deal. However, regulators in the UK blocked the acquisition in April, arguing that it would hurt competition in cloud gaming. However, Microsoft and Activision Blizzard also believe that the proceedings could be a positive by "accelerating the legal process".