Microsoft and Activision were supposed to merge today. Will they hit pause?

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Microsoft's (MSFT) $69 billion deal to acquire "Call of Duty" developer Activision Blizzard (ATVI) was slated to close today, but regulatory hurdles and a last-minute appeal to the Supreme Court appear to be keeping the largest-ever video game merger on pause.

On Tuesday, Bloomberg reported that Microsoft and Activision are trying to appease the United Kingdom's antitrust regulator, the Competition and Markets Authority (CMA), which said it would reconsider its initial decision to block the merger because it would suppress competition in cloud gaming.

A court in London, which is handling Microsoft's appeal of the CMA decision, agreed to put the matter on hold for two months. Regulators in the European Union and Japan have already given the merger agreement the green light.

There are still a few complications in the US as well.

One is that the Federal Trade Commission (FTC) is still challenging the merger in a lawsuit filed in the agency's in-house court even after its case was weakened when a federal appellate court denied its request to pause the tie-up. The FTC has alleged that combining the two companies would hurt competition in three gaming markets: game consoles, subscription content, and cloud gaming.

Another is a new effort by a group of video gamers to convince the Supreme Court to temporarily stop Microsoft from finalizing the acquisition to address concerns over "irreparable harm" to the gaming market. That request was made on July 15, just ahead of Tuesday's closing deadline.

The Supreme Court is under no obligation to consider the request.

Neither Microsoft nor Activision has responded to Yahoo Finance's requests to confirm if and when the deal will close. Microsoft also didn't reply immediately to a request for comment on the gamers' motion.

If closed, the deal would be the largest in Microsoft’s history.

File - An image from Activision's Call of Duty is shown on a smartphone near a photograph of the Microsoft logo in this photo taken in New York, Thursday, June 15, 2023. A judge handed Microsoft a big victory on Tuesday, declining to stop its $69 billion takeover of video game maker Activision Blizzard. (AP Photo/Peter Morgan, File)
Microsoft is attempting a $69 billion takeover of Activision Blizzard, maker of "Call of Duty." (AP Photo/Peter Morgan, File) (ASSOCIATED PRESS)

The gamers' case

In their request to the high court made on July 15, the gamers are revisiting their earlier request to a federal district court asking to pause the merger so they could voice worries about its potential to lessen competition in gaming markets.

The district court rejected the request, and the gamers appealed to the Ninth Circuit.

According to the gamers, the appellate court, which also denied their request, wrongly issued the ruling with no analysis of its position. Unless the Supreme Court intervenes to require a hearing and rationale from the appellate court, they argue, gaming consumers have no recourse to be heard on antitrust concerns.

"Failure to grant relief will allow the largest technology merger to consummate before plaintiffs can even be heard on the merits," the group said in a document filed with the Supreme Court on Saturday.

The district court, they argue, accepted "erroneous" claims from Microsoft that the company can merge with Activision without first allowing gamers to be heard on competition matters.

According to the plaintiffs, the district court should have required Microsoft to respond to what they claim are internal Microsoft documents that allegedly show its merger with Activision is part of a plan to buy up enough video game content to spend rival gaming company, Sony, out of business.

The plaintiffs also cite Microsoft’s 2021 acquisition of video game maker Zenimax for $7.5 billion, which the FTC highlights in its lawsuit to block the Activision acquisition.

The regulatory agency claims that Microsoft should not be trusted in its deal with Activision because it went back on promises to keep ZeniMax’s gaming franchises available on competing gaming platforms.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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