The FTC will certainly be the first big regulatory authority to give its opinion on the takeover of Activision Blizzard King by Microsoft. And according to the sources of the New York Post, a division within it might well promote the validation of the deal.
A difficult position for Lina Khan
While Politico evoked a possible risk that the competition regulator in the United States does not validate the agreement, sources of the New York Post today evoke a loophole which might lead the FTC to validate the agreement.
At least one Democrat on the four-member panel recently took a pro-merger view, according to a source familiar with the matter.
FTC Chairman Lina Khan, whom insiders consider to be rather suspicious of big tech companies, would then find herself in a rather uncomfortable situation.
According to the newspaper’s sources, Lina Khan has continued in recent weeks to push to block the merger between Activision and Microsoft. This jurist appointed in 2021 by Joe Biden as head of the Federal Trade Commission is notably known for having blocked the acquisition of Within Unlimited by Facebook this summer, deeming the acquisition as “illegal” with a risk of limiting consumer choices and driving up prices in the field of virtual reality.
The FTC’s only Republican commissioner, Christine Wilson, has indicated that she favors the deal. But, according to a source familiar with the matter, at least one of the three Democratic commissioners on the panel also appeared to lean on Microsoft’s side recently.
The identity of the ‘dissident’ Democrat might not be confirmed, but sources said it was Ms Rebecca Slaughter, who served as the acting chairwoman of the FTC until last year. By doing the accounts, the FTC might therefore count 2 members for and 2 members once morest the takeover.
This tie would thus be the least bad news for Microsoft since the result would effectively approve the agreement, but would also question Khan’s authority within the FTC. It would ultimately be unlikely that Lina Khan would take the risk of such a vote, according to the newspaper.
Politics come into play
- Rebecca Slaughter, FTC Commissioner
William Kovacic, a former chairman of the FTC, the current president of the regulatory authority would have almost no choice but to validate the agreement.
Lina would probably do anything to make that happen. So instead of having that vote, she would pass a motion to approve the deal. The way out is to say, “We got a good deal and we only got it because we were mean.”
The New York Post points out that Microsoft has a habit of courting Democrats. In the 2020 election cycle, Microsoft gave $13.8 million to Democrats and only $1.72 million to Republicans. By 2022, the company had given $4.1 million to Democrats and $1 million to Republicans, according to Open Secrets.
Rebecca Slaughter, the supposed “dissident” was a former adviser to Democratic Senator Chuck Schumer. The latter, Senate Majority Leader, reportedly met with Microsoft Chairman Brad Smith this summer to discuss, among other things, the ongoing merger with Activision and its potential impact on the New York Stock Exchange. According to the former FTC chairman, that’s when Chuck Schumer called his former protege, Rebecca Slaughter.
In recent weeks, several elements showed that Microsoft was ready to make concessions for the agreement to be validated. In particular, it was a question of a 10-year deal for Call of Duty on PlayStation. If Microsoft is finally ready to give in on certain points, the FTC’s arguments might therefore be undermined.
According to William Kovacic, the chances that the agreement can be validated are now around 70%. According to him, President Biden might ask someone like his antitrust adviser Tim Wu to push Khan to accept the proposal. The argument would be that Microsoft can be trusted to deliver on its promises because of its responsible behavior in the past, the sources say.
Be that as it may, things should settle down in the coming weeks since a FTC verdict expected in January. That of Europe and the United Kingdom is expected for March 2023.