What does the Microsoft-Activision ruling mean for dealmaking?

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A federal judge’s decision to allow Microsoft to close its $70 billion acquisition of the video game maker Activision Blizzard wasn’t just a win for the tech giant. It’s also a huge blow to the Federal Trade Commission, which has sought to block the deal.

That leaves Lina Khan, the agency’s president and proponent of broader antitrust laws, with a tough question: Is her strategy of aggressively fighting mergers counterproductive and actually encouraging more dealmaking?

Microsoft is about to close the deal. In her 53-page ruling, Judge Jacqueline Scott Corley writes that the FTC has failed to show that Microsoft’s purchase of the Call of Duty maker would significantly reduce competition in the video game market.

In other good news for Microsoft, Britain’s Competition and Markets Authority — the last remaining regulator to oppose the deal — said on Tuesday it was now ready to hear settlement proposals from the company. That means the Activision deal, the largest tech acquisition ever, could close as soon as next week. (The deadline for the transaction is July 18).

Tuesday’s ruling was the latest setback for Ms Khan’s Federal Trade Commission, that dropped a fight earlier this year against Meta’s purchase of a virtual reality startup. And last fall, the Federal Trade Commission suffered a defeat on what it assumed was a friendlier basis: a judge in its administrative court. Reject the organizer’s argument Illumina’s $7 billion acquisition of cancer detection company Grail was illegal.

Ms. Khan is unlikely to change course, at least for the time being. The Federal Trade Commission can appeal Judge Corley’s decision Once wed. Her argument may revolve around what Robert Land, a professor at the University of Baltimore School of Law, told DealBook is the judge’s reliance on a faulty legal standard about the potential for reduced competition.

Eleanor Fox, a professor at New York University School of Law, told the Times that Khan’s more expansive approach was more in line with what regulators in Europe and Britain were doing. (However, EU officials cleared the Activision deal in May.)

But skeptics say the FTC is in a weaker position. One of the company’s consultants told DealBook that the agency’s losses were Strengthening The limits of existing antitrust jurisprudence. “Khan is trying to do very ambitious things against a very entrenched ideology,” Anu Bradford of Columbia Law School told DealBook. “This ruling indicates that the courts may not be ready.”

Dealmakers are feeling increasingly emboldened. Executives and consultants told DealBook that companies are willing to roll the dice when it comes to ambitious deals. (Of course, they warned, it all depends on the circumstances of each case.)

Many still see the FTC suing to block large transactions, but believe the agency’s repeated losses mean they have a better chance of winning in court.

Bank of America fined $150 million. Federal regulators have accused the lending giant of withholding promised privileges from credit card customers, charging double the amount for overdrafts and opening card accounts in customers’ names without their knowledge or consent. The penalty partly reflects the Biden administration’s efforts to punish companies for what it calls “unsolicited fees” that it says harm consumers.

Senators will examine the possibility of more bank mergers. The Senate Banking Committee will Meeting held on Wednesday On that issue, in light of the chaos created by the Silicon Valley bank collapse this spring. Treasury Secretary Janet Yellen has indicated that more mergers could strengthen the banking system. Senator Elizabeth Warren, the Democratic chair of the committee, questions that argument.

Another large insurance company is pulling out of Florida. The farmers said so Cease to provide coverage in the state, ending about 100,000 policies, citing the need to “manage exposure to risk”. It is the fourth insurance company to shrink its business in Florida as the state grapples with more natural disasters amid climate change.

Tesla is reportedly investigating a home the company is financing for Elon Musk. Known internally as “Project 42,” the proposal called for a Spacious structure with glass walls Near the electric car maker’s Texas headquarters, according to the Wall Street Journal. Board members examined the plan to see if company funds had been misused, though The Journal said the outcome of the project and investigation could not be determined.

The PGA Tour came under fire Tuesday at a Senate hearing over a proposed deal involving LIV Golf, its Saudi Arabia-backed rival. The deal could see the kingdom pump more than $1 billion into sports, but the deal has been criticized by lawmakers, and is expected to be studied by the Ministry of Justice.

Here are the main points from the hearing and documents released by the Senate:

The deal was announced before it was completed. “The program’s rollout was deeply misleading and inaccurate, and it’s everyone’s fault,” said Jimmy Dunn, the investment banker and PGA Tour director who helped organize it. He said that the merger was not agreed upon.

According to the documents, Michael Klein, a veteran dealmaker and advisor to Saudi Arabia, paid both sides to release the information. “The ad is too big to wait until the end. If we don’t put the letters in, others will fill them in,” he wrote to the parties involved in an email. “The worst thing we can do is have the naysayers lead the chorus.”

The PGA Tour felt it had no choice. Mr. Dunn and the tour’s chief operating officer, Ron Price, told the hearing that the billions behind LIV made it impossible for the PGA Tour to fight indefinitely. Mr Dunn said the wealth fund wanted to “destroy the round”, and is backed by “an unlimited horizon and an unlimited amount of money”.

The dealmakers advocated keeping the board and players in the dark. “We were really afraid that as soon as the other side’s lawyers knew anything about it, he’d be a poof, and he went,” said Mr. Dunn, who was one of the lead negotiators along with Ed Herlihy, a Wachtell partner and fellow director.

PGA Tour executives were given a list of contact persons and sponsors on the day the transaction was announced. Highest ranking Guy Monahan, Tour Commissioner: Rory McIlroy, manager and one of LifeGolf’s most vocal critics, and Tiger Woods. One suggestion brought up the idea of ​​players owning LIV teams.

Exclusive membership was proposed for a high-ranking Saudi official. The Saudi wealth fund has floated the idea that Yasir Al-Rumayyan, its governor, could get membership at Augusta National Golf Club and the Royal Old Golf Club in St Andrews as part of the deal. Neither club is controlled by the PGA Tour, but both Mr. Dunn and Mr. Hurlihy are members of Augusta.

Key question: Judgment. Mr. Dunn reiterated that the PGA Tour would still be in charge, despite the Saudi money. “What I can say is that the Tour will continue to run the game,” he said. “The round will appoint a majority of the members of the board of directors.”

– An anonymous studio executive told Deadline that Hollywood plans to let the weeks-long writers’ union strike run through the fall, causing economic pain. Representatives can join writers on the picket line as the midnight deadline approaches.

Chatbots and synthetic AI have captured the public’s imagination, with the technology’s biggest proponents saying it’s possible. It adds trillions in economic value over the next decade. It also generates lawsuits that present bewildering new issues for courts and companies.

On Tuesday, Google was sued in a presumptive class action lawsuit in California federal court accusing the company of violating privacy laws and committing “continuous theft” by scraping Internet users’ data across the Internet to train its chatbot without their consent. Google’s case, a parallel case filed last month against Microsoft and OpenAIthe maker of ChatGPT, demands that technology companies compensate Internet users for appropriating this data.

The cases represent “an evolution in people’s understanding of the value of data,” said Tracy Kwan, a partner at Clarkson’s, who filed the suit. People are increasingly realizing that their online footprint—think posts and likes—has economic value to tech companies. In the social media economy, an industry of data brokers has emerged to buy and sell this data. In the era of artificial intelligence, similar data is used to train new generative AI tools.

For this reason and others, the same technology executives, including OpenAI CEO Sam Altman, have called on lawmakers to regulate AI in recent months.

The allowances go furtheradding to public cries for a temporary halt to the commercialization of artificial intelligence until guidelines are in place. “We’re all just guinea pigs in their experience,” said Ryan Clarkson, a partner with the firm. In the meantime, the suits are calling for users to be allowed to opt out, so they can have better control over how tech companies use their data.

“We’ve been clear for years that we use data from public sources – such as information published on the open web and public datasets – to train the AI ​​models behind services such as Google Translate, responsibly and in line with Principles of artificial intelligencesaid Halima Deline Prado, General Counsel at Google. “U.S. law supports the use of public information to create new beneficial uses, and we look forward to refuting these unsubstantiated claims.” Microsoft declined to comment. OpenAI did not respond.

Comedian Sarah Silverman has also joined the AI ​​litigation battle, Signing a separate lawsuit against OpenAI and Meta for copyright infringement. It’s the latest of the big-name creators to demand that AI companies use their intellectual property first to license them.

deals

  • Reportedly, ByteDance, the parent company of TikTok, has allowed US employees exchange their shares In the Chinese technology giant before any initial public offering (Reuters)

  • Nvidia is said to be in talks to become an anchor investor in the upcoming IPO of Arm, the British chip designer. (foot)

  • Tech tycoon Sam Altman plans to Oklo integration, a nuclear power startup he backed, with a blank check vehicle he created, taking the company public. (Wall Street Journal)

  • Disney reportedly weighs a Selling Star India business, amid mounting losses in the division after it lost broadcasting rights to cricket matches in the Indian Premier League. (Wall Street Journal)

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