Today we have analysis from Florian Mueller of the FOSSPatents blog, explaining why May 22, 2023, this coming Monday, is an important date in the course of Microsoft acquiring Activision Blizzard King.
Florian has explained in the past his prior interest in this case. He has worked for Activision and Microsoft in the past, and he has also expressed his belief that the acquisition itself would be a good thing.
We understand some readers don’t trust or believe Florian because of his inherent biases. In this situation, he is motivated to share an honest assessment of where the case is. That’s because he’s followed cases like this and knows what the procedures and possible outcomes are.
The May 22, 2023 date is tied into the private lawsuit filed vs the deal in California, popularly known as the gamers’ lawsuit. Microsoft told Judge Corley, who is presiding over this case, that it would be ‘very difficult to close now.’
Basically, Microsoft promised Judge Corley they would not try to finalize the deal before May 22. If they actually tried this, having given their word, Judge Corley would find them in contempt of court.
Microsoft definitely wants to avoid the potential sanctions from contempt of court, but here’s the interesting thing; that’s the worst any of the entities blocking the deal can do to them.
Microsoft is not disadvantaged vs the FTC. If Microsoft tried to finalize their deal after May 22, they would have to inform the FTC. The FTC could then try to get a TRO, but both Microsoft and FTC would have to agree to the terms of this TRO.
So, if such a TRO ends, Microsoft could reject letting the TRO be extended, and just finalize their deal the following day.
The CMA also cannot effectively enforce their decision to ‘prevent’ the Microsoft – Activision deal. Of course, the deal was between two American companies, and already approved in many other countries and business regions.
The CMA decision is not binding to any US court since they are different jurisdictions. The CMA also added and interim order that Microsoft and Activision cannot buy each other’s shares. While in theory that stipulation is enforceable, for practical purposes it also cannot prosper.
The UK would in theory fine Microsoft 5 % of their worldwide profits, but this fine would be subject to provisional review. And the fine likely won’t pass such review, as the UK government is now on alert that the CMA’s decision has sent a message that their country is “closed for business.”
After May, the second most interesting period is between June 9 and July 18. June 9 is the date of New Zealand’s decision on the merger. After that, June 21 is the date of South Africa’s decision.
July 18 is the end date of Microsoft’s and Activision’s agreement, so it’s likely that Microsoft and Activision will try to finalize their agreement in July.
The FTC, California lawsuit, and CMA could still try something, but Microsoft and Activision would simply appeal those decisions and delay where possible.
There could be a chance that any of these entities could penalize Microsoft and Activision after the fact, but in this case, the legal system in the US and UK, which allows for appeals, will work in Microsoft’s and Activision’s favor.
As of this writing, it is May 18, 2023. So the Microsoft – Activision deal could be finalized in two months! While we can’t predict every possible thing that could happen before then, thanks to Florian’s expertise we have a reasonable idea of what to expect.
