Microsoft will fight the U.S. government over its $68.7 billion purchase of video game maker Activision Blizzard.
The Redmond, Wash.-based software giant said late Tuesday that it intends to challenge the Department of Justice's decision to block its acquisition of the company, citing concerns about competition.
The Redmond, Washington-based company said Monday that it would argue against the proposed deal in court, arguing that it would harm competition and innovation in the industry.
Microsoft said its decision to oppose the bid is based on concerns over how the companies' operations overlap and whether there would be any negative impact on users if they were combined. "Microsoft intends to continue to vigorously defend its position through this process," said a statement issued by Eric Hirschberg, general counsel for Microsoft. "While we have not yet been able to fully evaluate all of the details of Activision Blizzard's proposal and their concern about potential issues relating to our overlapping product lines and customer relationships, we believe there are significant risks involved in this transaction."
Microsoft Corp. is challenging the U.S. government's right to block its $68.7 billion acquisition of game publisher Activision Blizzard Inc., saying the deal is in the public interest and will create jobs and boost innovation.
The Redmond, Washington-based software giant filed a request with a federal court in Delaware on Monday that challenges a decision by the U.S. Department of Justice to block the acquisition on antitrust grounds. The DOJ had said that, while it agreed that Microsoft would benefit from its purchase of a company with a large number of popular games, it feared that it could use its market power to harm rivals in other areas such as search engines or operating systems for personal computers.
Microsoft was given until July 12 to submit its response, but said it wanted to file early because it wanted to ensure a quick resolution to what is expected to be a long legal battle over whether regulators have jurisdiction over technology companies' sales of their own products through their own websites or stores such as Amazon Inc.'s website or Apple Inc.'s iTunes Store.
Microsoft is preparing to take on the US government over what it sees as an unfair tax break for Activision Blizzard, the video game publisher whose headquarters are in Irvine.
Microsoft is seeking a refund of $1.5 billion in taxes it paid on the deal, which was completed in 2011, according to a person familiar with the matter. The company filed its request last year and has been awaiting a response from the Internal Revenue Service (IRS) since then.
A hearing date has not been set yet but could come as soon as this fall, according to two people close to the matter.
The company's position is that it should not have had to pay any taxes because it bought back its own shares at an artificially low price just before the deal closed. Microsoft's lawyers argue that it was obligated under Delaware law to buy back its stock at fair market value so it wouldn't owe taxes on its earnings when it held those shares.
Activision Blizzard's tax treatment has become a flashpoint in Washington, with politicians from both parties calling for change. In October, President Donald Trump signed into law legislation that gives companies like Activision Blizzard special treatment when they repatriate overseas cash.
Microsoft has been leading the tech system in the United States for a number of years! But now the most powerful and polite company will fight against the United States government for the blizzard deal, which had been holded for a number of years now.
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