Rift at FTC hopes for Microsoft’s $69 billion Activision merger: sources

The Federal Trade Commission is at odds over Microsoft’s $69 billion deal to buy Activision — which could pave the way for approval of the controversial mega-merger, The Post reports.

At least one Democrat on the four-member panel has been sympathetic to the recent merger, according to a source close to the situation. That, in turn, could create a tough road ahead for FTC Chairwoman Lina Khan, who insiders say has seen the Microsoft deal as a top target because of her reputation as a big tech fiduciary. wants to burn data.

According to sources, Khan made it clear that the agency was in June study the impact of the deal on workers — in recent weeks was still pursuing a lawsuit to block a merger that would combine Microsoft’s Xbox with popular Activision games like “Call of Duty” and “Candy Crush.” Late last month, Politico reported that an FTC lawsuit against the deal was “likely,” noting that agency officials were “skeptical about the companies’ arguments.”

The FTC’s lone Republican commissioner, Christine Wilson, supported the deal. But at least one of the four-member panel’s three Democratic commissioners — in addition to Khan, Rebecca Slaughter and Alvaro Bedoya — have recently leaned toward the Microsoft camp, according to sources familiar with the matter.

FTC Commissioner Rebecca Slaughter was an adviser to Senate Majority Leader Charles Schumer, and Schumer recently met with Microsoft.
Bloomberg via Getty Images

“Some Democrats may be more comfortable with a deal,” an FTC insider told The Post, approving a deal with concessions from the companies instead of blocking it entirely.

While the identity of the outspoken Democrat could not be immediately confirmed, D.C. sources after the incident pointed to Slaughter, who served as FTC chairman until last year, when President Joe Biden tapped Khan, 33, to head the powerful regulator. installed. agency.

The Democratic withdrawal would leave Khan with a 2-2 tie on any vote to stop the merger — which would not only effectively end the deal but also call into question Khan’s authority over the agency. According to DC insiders, this is accordingly a non-threatening vote for Khan.

“Lina probably isn’t in a position to do that, so she’s going to make a motion to approve the deal instead of going to a vote,” said former FTC Chairman William Kovacic. “The way out is, ‘We have a lot and we only got it because we were stupid.'”

Microsoft has a history of cozying up to Democrats. In the 2020 election cycle, Microsoft donated $13.8 million to Democrats and just $1.72 million to Republicans. In 2022, he gave $4.1 million to Dems and $1 million to Republicans, according to Open Secrets.

Rebecca Slaughter with her young child on the monitor.
Politicos will likely call commissioners like her mother, Rebecca Slaughter, to get them to support the merger.

In July, Senate Majority Leader Chuck Schumer reportedly traveled to Washington state to meet with Microsoft President Brad Smith to discuss, among other things, the pending Activision merger and its potential impact on New York. They also reportedly dated in February.

Insiders say Slaughter was Schumer’s top adviser from June 2014 to May 2018 before leaving to become FTC commissioner.

“Schumer called his old staffer and said, ‘What’s up?'” according to Kovacic.

At the same time, in recent days there have been reports that Microsoft is ready to make serious concessions to make the deal happen. Last week Reuters reported that Microsoft May offer a 10-year license agreement to Playstation owner Sony for its Call of Duty blockbuster, citing unnamed sources.

As The Post reported earlier last month, Microsoft’s stubborn refusal to make clear concessions to regulators and competitors in exchange for winning the deal has been a major obstacle. If Microsoft finally shows it’s willing to budge, it will weaken any case for the FTC blocking the merger — and embolden opponents, experts say.

“It makes it difficult for Microsoft to go to its friends out of the blue and say, ‘We’ve provided a set of solutions for all the known problems, and the FTC people are being very unreasonable if they don’t accept it,'” Kovacic said.

If Microsoft does propose a significant measure, President Biden wants the deal resolved and will ask someone like his antitrust counsel, Tim Wu, to push Khan to accept the offer, the former FTC chairman said. Microsoft can be trusted to keep its promises because of its past responsible behavior, the sources said.

“It’s become difficult to say, ‘This is not good enough,'” said Kovacic, who now puts the chance of the merger being approved at 70%. “It’s going to be harder for the commission to set it aside.”

Doubts about the deal on Wall Street persist. Although Microsoft agreed to pay $95 in cash for Activision’s share, Target’s stock closed Friday at $75.76.

iPhone with Microsoft logo.
Microsoft is the most favorable technology company for Democrats.
SOPA Images/LightRocket via Gett

FTC staff are expected to make recommendations on the Microsoft deal in mid-December. Sources close to the agency said Microsoft could meet with individual commissioners later to discuss its case ahead of a final vote, which could come later this month.

“As we’ve said before, we’re prepared to address the concerns of regulators, including the FTC and Sony, to ensure the deal closes securely,” a Microsoft spokesperson said. “Even after the deal closes, we will outpace Sony and Tencent in the market, and Activision and Xbox together will benefit gamers and developers and make the industry more competitive.”

A spokeswoman for the FTC declined to comment, saying the agency does not discuss specific transactions it is reviewing.

America’s communications staff wrote in a June 30 letter that they support the deal and are lobbying Congress, an FTC insider said. The CWA said it believes the merger will give Activision Blizzard workers a clear path to collective bargaining and unionization. That’s a message lawmakers may be inclined to pass on to the FTC, the sources said.

“All the commissioners have adjusted to the Hill,” one D.C. insider told The Post.


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