In a significant win for Microsoft, a California judge has denied the Federal Trade Commission’s (FTC) request for a preliminary injunction to block the company’s acquisition of Activision Blizzard.
Judge Jacqueline Scott Corley’s ruling comes after a five-day trial in June where Microsoft and the FTC presented their arguments. The judge found that the FTC had not shown a likelihood that this particular vertical merger in the gaming industry would substantially lessen competition. Instead, the record evidence pointed to more consumer access to Call of Duty and other Activision content.
The ruling also green lights Microsoft to close the $68.7 billion deal ahead of the July 18th deadline. The FTC is still able to appeal the decision, but Judge Corley has sided with Microsoft’s commitments to keep Call of Duty on PlayStation, bring the game to Nintendo Switch, and bring Activision’s content to cloud gaming services.
1/We’re grateful to the court for swiftly deciding in our favor. The evidence showed the Activision Blizzard deal is good for the industry and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market.
— Phil Spencer (@XboxP3) July 11, 2023
The UK regulator’s block on the acquisition is still pending appeal, but Microsoft and the regulator have agreed to pause their legal battle to negotiate a remedy. The regulator initially blocked the deal over cloud gaming concerns, but they are now willing to consider proposals from Microsoft to satisfy its concerns.
If the deal is not closed by the deadline, Microsoft will be on the hook for a $3 billion breakup fee unless the two sides renegotiate terms or extend their agreement.
The FTC has expressed disappointment with the ruling and has vowed to continue its fight to preserve competition and protect consumers. However, the ruling is a significant setback for FTC Chair Lina Khan, who has been pursuing Big Tech companies since she was confirmed as the head of the agency in 2021.
In a statement following the ruling, Microsoft president Brad Smith said the company was “grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution.”
Our statement on today’s decision: pic.twitter.com/jRDD8PhBeT
— Brad Smith (@BradSmi) July 11, 2023
Activision Blizzard CEO Bobby Kotick also commented on the decision, saying that the merger will benefit consumers and workers and enable competition rather than allow entrenched market leaders to continue to dominate the industry.
The US court ruling is a significant victory for Microsoft, as it seeks to expand its presence in the gaming industry. With the acquisition of Activision Blizzard, Microsoft will have access to some of the most popular gaming franchises, including Call of Duty and World of Warcraft.
The deal is also expected to reshape the future of gaming, with Microsoft and Activision Blizzard potentially becoming dominant players in the industry. However, the company may still face regulatory hurdles in the UK and further potential appeals from the FTC.
