Judge Rules in Favor of Microsoft’s Activision Blizzard Acquisition

By Hope Pisoni  |  July 11, 2023 | 2:55pm
Video Games News Microsoft
Judge Rules in Favor of Microsoft’s Activision Blizzard Acquisition

A California judge has allowed Microsoft to close its acquisition of Activision Blizzard, ruling against the Federal Trade Commission’s request for a temporary injunction.

This ruling comes after last month’s evidentiary hearing on the FTC’s request to block the acquisition until the agency could complete its administrative review of the buyout, which was set to begin August 2. Judge Jacqueline Scott Corley ruled that the FTC’s anticompetition concerns were not substantial enough to halt the deal.

“For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition,” Judge Corley wrote in her ruling. “To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.”

This language refers to one of the FTC’s arguments, namely that Microsoft could make Activision’s Call of Duty series exclusive to the Xbox series of consoles, which would be a substantial blow to competitors not having access to one of the most popular and lucrative franchises in the industry. However, Microsoft committed to keeping the series on Playstation and even pursuing its release on Nintendo Switch and cloud gaming platforms, and no evidence was discovered which cast doubt on these commitments.

Microsoft Vice Chair and President Brad Smith released a statement on Twitter on the company’s behalf.

“We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution,” he said. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

FTC spokesperson Douglas Farrar also released a statement to the press following the ruling.

“We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles,” Farrar said. “In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”

At this point, the FTC could appeal the decision prior to 11:59 p.m. on July 14, but their recent track record seems to suggest otherwise, having chosen not to appeal a similar loss on Meta’s purchase of Within. Assuming they don’t appeal, Microsoft and Activision Blizzard will be able to close the deal beginning on July 15, with the original stated deadline for the deal being July 18.

The last major regulatory hurdle for the acquisition is the UK’s Competition and Markets Authority (CMA), which blocked the deal in the country last April. The two companies could theoretically work around the regulator, but Smith has said that Microsoft is interested in negotiating with the CMA to address their concerns, with the two parties agreeing this morning to pause litigation so such negotiations can take place.

This marks the latest in a series of losses for FTC Chair Lina Khan, who has made challenging consolidation in the tech industry a priority of her tenure. However, despite her skepticism of some of the arguments made by the agency, Judge Corley noted in her ruling that the FTC’s scrutiny was important, and that it helped ensure Microsoft’s commitment to keeping Call of Duty multiplatform.

 
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