A rift has emerged at the Federal Trade Commission over Microsoft's $69 billion deal to acquire Activision — potentially paving the way for the controversial mega-merger to get approved, The Post has learned.
At least one Democrat on the four-member panel has recently taken a sympathetic view of the merger, according to a source close to the situation. That, in turn, could create a difficult path for FTC Chair Lina Khan — who according to insiders has eyed Microsoft's deal as a major target as she looks to burnish her credentials as a trustbuster of Big Tech.
Sources said Khan — who said publicly in June the agency was scrutinizing the deal's impact on workers — was in recent weeks still pushing to sue to block the merger, which would pair Microsoft's Xbox with hit 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 the agency's staff are "skeptical of the companies' arguments."
The FTC's sole Republican commissioner, Christine Wilson, has signaled support of the deal. But sources say at least one of the four-member panel's three Democratic commissioners — which in addition to Khan include Rebecca Slaughter and Alvaro Bedoya — also has recently appeared to lean toward the Microsoft camp, according to a source close to the situation.
"Some of the Democrats might be more comfortable with a settlement," approving the deal with concessions from the companies instead of trying to block it altogether, an FTC insider told The Post.
While the identity of the dissenting Democrat couldn't immediately be confirmed, DC sources following the situation pointed to Slaughter, who was acting FTC Chair until last year, when President Joe Biden installed 33-year-old Khan at the helm of the powerful regulatory agency.
A Democratic defection would leave Khan with a 2-2 tie in any vote to clamp down on the merger — a result that would not only effectively OK the deal but also throw Khan's authority over the agency into question. That, accordingly, is a vote that Khan isn't likely to risk, according to DC insiders.
"Lina would probably not put things in a position for that to take place, so instead of having that vote she would make the motion to approve the settlement," said William Kovacic, a former FTC Chairman. "The way out is to say, 'We got a great deal and only got it because we've been badasses.'"
If Microsoft does indeed offer a significant remedy, President Biden would likely want the deal cleared and ask someone such as his antitrust advisor Tim Wu to push Khan to accept the proposal, the ex-FTC chairman said. The pitch would be that Microsoft can be trusted to keep its promises because of its past history of responsible behavior, sources said.
"It does become hard to say, 'This is not good enough,'" said Kovacic, who now puts the chances of the merger getting approved at 70%. "It becomes more difficult for the Commission to push this aside."
Rift at FTC Stirs Hope for Microsoft's $69B Activision Merger