The journey for Microsoft's acquisition of Activision Blizzard has been hit with more turbulence.
On Thursday, July 13, the United States Federal Trade Commission (FTC) filed an appeal with the federal court to delay Microsoft's completion of the acquisition, valued at $69 billion.
Earlier this week, federal judge Jacqueline Scott Corley had ruled in favor of Microsoft. She concluded that the FTC had failed to prove that the transaction was unlawful under antitrust law, allowing Microsoft to continue its pursuit of Activision Blizzard. The FTC appealed this decision on Wednesday night.
In its Thursday motion, the FTC asked the court to prevent the transaction from concluding until it makes a judgment on the appeal.
Any unresolved regulatory hurdles could potentially delay the deal between Microsoft and Activision Blizzard from closing before the agreement expires on July 18. After this date, either party could freely withdraw from the transaction unless they mutually agree to an extension.
The FTC is urging the court to swiftly decide on the temporary halt of the deal, emphasizing that the current temporary restraining order against the transaction will end before midnight on Friday.
In an emailed statement, Microsoft President Brad Smith expressed disappointment with the FTC's ongoing pursuit of a case they have little chance of winning, stating that they will oppose any further attempts to delay the transaction.
In its request to Judge Corley for the temporary halt, the FTC argued that her preliminary order refusing to stop the deal "raised serious, substantive questions" that the appellate court needs to address.
The FTC noted that it's seeking a temporary stop to the transaction until its internal judge can review it, but Corley's ruling utilized standards needed for a permanent stop, which the agency considers inappropriate.
Additionally, the FTC expressed that the judge had made errors in her judgement of the case itself.
To address the FTC's concerns, Microsoft agreed to license Activision Blizzard's "Call of Duty" to its competitors, including a 10-year contract with Nintendo.
In its statement, the FTC added, "More fundamentally, the court erred in crediting self-serving testimony from Microsoft executives that they had no plans to exclude competitors and finding that the FTC failed to provide adequate evidence."
The green light by U.S. judges for Microsoft's acquisition signifies U.S. approval for Microsoft to try to finalize its deal with Activision Blizzard before the July 18 deadline. However, the deal has met resistance in the United Kingdom. In late April, the UK's top regulator, the Competition and Markets Authority (CMA), stated opposition to Microsoft's acquisition of Activision Blizzard, officially rejecting it in May. Microsoft's acquisition was approved by the European Union in May of this year.
However, there was a dramatic turnaround in the UK regulator's stance on the same day. Less than an hour after the news of the San Francisco court judge agreeing to Microsoft's acquisition of Activision Blizzard, the CMA quickly responded that it was ready to consider any proposal from Microsoft. Microsoft, Activision Blizzard, and the UK's CMA have asked the court to suspend the lawsuit proceedings. A CMA spokesperson stated, "We are always ready to consider any proposals for restructuring transactions from Microsoft to address concerns."
It's quite rare for the FTC to persistently pursue and appeal merger disputes. The last such occurrence was over a decade ago when the FTC appealed a court ruling after losing a lawsuit against Whole Foods' acquisition of Wild Oats.
