The Federal Trade Commission (FTC) is reportedly considering a pause in its trial against Microsoft over the acquisition of Activision Blizzard.
This move comes in the wake of mounting pressure from lawmakers urging the FTC to cease its opposition to the deal.
A Change in FTC’s Stance
Following a week-long hearing in late June, the Ninth Circuit Court of Appeals rejected the FTC’s attempt to block Microsoft’s acquisition of Activision Blizzard on July 14. The FTC’s defeat in federal court was widely seen as a significant setback in its efforts to prevent the deal.
However, recent regulatory filings indicate that the FTC has now suspended an administrative challenge to the deal that was scheduled for an in-house trial in August. This development paves the way for potential settlement talks between Microsoft and the FTC.
The Implications of the Suspension
While the FTC continues to appeal the federal court ruling approving the deal, Microsoft could theoretically proceed with the acquisition without explicit approval from the FTC.
Given this situation, the FTC’s decision to pause its administrative case against the $68.7 billion acquisition could be interpreted as a sign of the regulator’s willingness to negotiate concessions from Microsoft, rather than continuing to outright oppose the deal.
The Road Ahead
If settlement talks are indeed on the horizon, such discussions are expected to be relatively swift. This is particularly pertinent given that Microsoft has already missed its original July 18 deadline for closing the deal. In response to this delay, Microsoft and Activision Blizzard agreed to extend the acquisition deadline by another three months earlier this week.
In return for its continued cooperation, Activision Blizzard managed to increase the previously agreed $3 billion termination fee by an additional $500 million. Furthermore, if the deal is terminated after September 15, the breakup fee that Microsoft will have to pay to Activision Blizzard will rise to $4.5 billion.
Other Regulatory Challenges
In addition to the FTC’s challenge, the acquisition is currently facing regulatory pushback from the British Competition and Markets Authority. Microsoft appealed the UK’s rejection of the Activision Blizzard deal in late May, with a final decision expected by the end of the summer.