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FTC sues to block $69 billion Microsoft-Activision deal

Yahoo Finance’s Alexis Keenan joins the Live show to discuss the latest surrounding the FTC’s efforts to block Microsoft’s $69 billion Activision Blizzard acquisition deal.

Video transcript

- The Federal Trade Commission is suing to block Microsoft's $69 billion acquisition of Activision Blizzard and claiming that it would violate US law if it went through. Joining us now, Yahoo Finance's Alexis Keenan with the latest. Now, this isn't a shock, right, that this happened. This was something that had been speculated upon. And it's interesting, Alexis, given that Microsoft has tried to already take some steps to try to, I don't know, predict some of the government's objections.

ALEXIS KEENAN: Yeah. They definitely tried to anticipate trying to appease the FTC with some deals. And I'll tell you about those in a minute. So as you said, this is a $69 billion deal. It would be the largest ever, both for Microsoft as well as for the video game industry. But what the FTC is saying is that the deal would enable Microsoft to suppress competition. And they name three specific markets. They talk about not only gaming consoles, but also subscription gaming content and also cloud based gaming.

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In the complaint, the FTC specifically says this as well. They say with control of Activision's content, Microsoft would have the ability and increased incentive to withhold or degrade Activision's content in ways that substantially lessened competition, including competition on product quality, price, and innovation. So the FTC, it also goes on to accuse Microsoft as being untrustable.

And what they do is they say that's based on Microsoft's track record over across the pond. In the EU, they say that it Activision-- or, rather, Microsoft had given assurances to EU regulators when it acquired Bethesda Softworks in 2021, saying that it didn't have any incentive to exclude games from other console makers. But it did so anyway. So they said Microsoft is not to be trusted here. We could expect to see more of that if they acquire Activision and all of its very lucrative content.

Now, Microsoft, as you pointed out, they did agree to a concession. They agreed to make Call of Duty available on rival console gaming network-- or console gaming system, I should say, Nintendo Switch. They agreed to a 10-year term during which Nintendo could run that game. Also, Microsoft offering a similar deal to Sony PlayStation to keep that game, because it is so lucrative, available.

Now, there's also regulatory reviews going on in the UK and in the EU. So those are also pending. Those are expected to end at-- or at least conclude by the end of the first quarter next year. But, Julie, this complaint that the FTC has filed, it is an administrative complaint. The agency chose not to file in the district court. And that can take a bit longer, about six to eight months compared to the district court that would get an answer a little bit more quickly.

- So Alexis, it just sounds like there won't be any resolution here perhaps well into next year.

ALEXIS KEENAN: Yeah. At least overseas, by the end of the first quarter, we should know more. But this antitrust action in the US, it is a bit slower than what would have happened in the district court. So yeah. I think we're going to have to wait, looks like, till the end of July to really have some conclusions on this. Microsoft, for its part, it does have to file, if it does want to object to this complaint-- and we should expect that they will object. That has to happen 14 days from the date of this complaint, which was yesterday. So we'll start to see Microsoft's argument at least once it makes some of its filings.

- Yahoo Finance's Alexis Keenan, thanks so much.