how Microsoft would force America’s hand

During the first hearing of the lawsuit between the FTC and Microsoft, the Redmond company was ready to fight.

The most important licenses for Activision Blizzard // Source: Klobrille

After the year-end festivities, the soap opera of Microsoft’s takeover of Activision Blizzard resumes with a vengeance. In December, the US government announced via the FTC that it was suing Microsoft to block their takeover project.

In anticipation of the trial, which is set to open on August 2, 2023, lawyers for both parties as well as Judge Chappell have met for a hearing to discuss the case. Microsoft’s claims helped clarify its strategy.

Implementation of the takeover without agreement from the United States

Through its lawyer Beth Wilkinson, Microsoft announces that it hopes to receive validation for the acquisition from the EU and the UK. With these validations in hand, the company says it is ready to return to the negotiating table with the FTC to agree on a settlement.

James Weingarten, the attorney representing the FTC at the event, said he was open to negotiating a deal but said no such talks were underway.

More importantly, the lawyer tells Judge Chappell that if no deal is reached, but the acquisition is validated everywhere else in the world, Microsoft says it is ready to close the acquisition without the consent of the FTC and despite the ongoing litigation .

Despite the August 2, 2023 tentative opening, Microsoft still says it is confident the acquisition will close by July 18, 2023, the deadline set for January 2022 before the FTC’s decision.

A risky game for Microsoft

The path that Microsoft has announced is dangerous for the company. It therefore illustrates the company’s great confidence in the soundness of its case files. In fact, if the outcome of the trial (which could take place in 2024 or later) is negative, Microsoft will be forced to dismantle the Activision Blizzard group, which it will have spent the year integrating into its strategy.

Forcing the hand of the FTC

Most likely here is that Microsoft is trying to put the FTC in a bind. Today, the lawsuit brought by the FTC does not block the takeover, which is what allows Microsoft to announce that it will complete its project without the consent of the United States if it wants to.

If Microsoft goes this route, it is highly likely that the FTC will have to file an injunction before a federal judge to block the closing of the acquisition. Such action would remove the lawsuit from the domain of Judge Chappell, the administrative judge of the FTC, to take the case to the federal level. According to lawyers who specialize in the field, the FTC would have a much lower chance of winning at the federal level.

Microsoft is well aware of these variables, and in order to force the transition to the federal government as quickly as possible, announcing a closing of the acquisition seems to be the most effective solution.

Europe in the center of attention

All these assumptions originate from one timeline where the European Union and the United Kingdom validate the takeover project, with or without negotiations on Microsoft’s part. More than ever, eyes are therefore focused on the two European decisions.

The UK CMA should publish its first guidelines in the coming days, during the month of January 2023. For the European Commission, the deadline is 11 April 2023.

Once these two decisions are known, the future of Microsoft’s acquisition of Activision Blizzard will appear much clearer.

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