Microsoft lied to them – Do they have to release Activision Blizzard again?

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Microsoft is in trouble with the US financial regulator, the FTC. They only allowed Microsoft to buy Activision Blizzard (Call of Duty, WoW) because they made certain promises. But Microsoft has now broken these promises when they laid off 1,900 people at Activision Blizzard. The FTC is appealing to the appeals court.

That is the situation:

  • Microsoft bought Activision Blizzard for almost $69 billion. The deal was so big that they needed the approval of numerous antitrust offices and financial supervisory authorities around the world. It took a good year and a half from the offer to the point when the deal was completed and the merger was initiated. But the deal is not completely through, the FTC has filed an appeal.
  • Such a deal runs the risk of creating a monopoly that would have a negative impact on the market. Sony in particular didn’t like the merger of Xbox with Activision.
  • In order to get the deal through, Microsoft made numerous promises and commitments that there would be no monopoly and that Activision Blizzard would actually continue to exist as a sole proprietorship. The promise has now been broken.

    • Call of Duty in particular was a major bone of contention between Sony and Microsoft, which threatened to collapse the deal:

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    Layoffs at Activision Blizzard are against the assurances

    What are the complaints? An FTC attorney has filed a complaint with the San Francisco Court of Appeals accusing Microsoft of breaking promises (via courtlistener):

    Microsoft assured that the merger with Activision would help the entire company grow. Activision Blizzard and Microsoft should act largely independently of each other. And Activision Blizzard should remain largely the same as it was before the merger.

    But that is now in question. Because many jobs were cut because there were overlaps. This is exactly what contradicts the assurances that both companies should remain largely independent.

    The lawyer also criticizes the fact that Microsoft has now released several Bethesda games exclusively for the Xbox, despite promising European authorities not to do exactly that.

    So there would be a difference between what Microsoft says and what it ultimately does.

    The lawyer says that Microsoft is contradicting itself, that their actions are “undermining” the promises they made and that Microsoft is “inconsistent” in its statements – that’s probably legalese for “They lied to us.”

    What could happen there? As the Polygon site writes, it would theoretically be possible that Microsoft would have to reverse the merger and release Activision Blizzard again.

    Something like this has happened in the past: two grocery chains merged in 2009, but then lost in the appeal process. Ultimately, the company had to give up 32 stores and a brand name.

    However, the likelihood of this happening at Microsoft is low.

    A statement from the appeals court on the FTC attorney’s submission is still pending.

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