A federal court nixed the FTC‘s request to block Microsoft‘s acquisition of Activision Blizzard, which could pave the way for the $69 billion deal to close as soon as this month.
The U.S. District Court of the Northern District of California on Tuesday issued a ruling denying the Federal Trade Commission’s request for a preliminary injunction in its case regarding Microsoft’s acquisition of Activision Blizzard. Microsoft has signaled it intends to close the takeover of Activision Blizzard — which would be the biggest ever in the gaming sector — by the July 18 deal termination date.
In the ruling (available at this link), District Court Judge Jacqueline Scott Corley cited in part Microsoft’s commitment to keep Call of Duty on PlayStation for 10 years, on parity with Xbox, and that Microsoft inked an agreement with Nintendo to bring the game to Nintendo Switch. The judge found that “the FTC has not shown a likelihood it will prevail” on its claim that the merger “may substantially lessen competition,” she wrote. “To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content.”
The judge’s ruling could allow Microsoft to close the Activision Blizzard deal, pending Microsoft’s resolution of the U.K.’s Competition and Markets Authority (CMA) decision block the deal on grounds that it is anti-competitive.
“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,” Microsoft vice chair and president Brad Smith said in a statement. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”
Regarding the CMA, Smith said, “While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA. In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the U.K. would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”
Bobby Kotick, Activision Blizzard CEO, also responded to the U.S. court ruling, saying in a statement, “Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.” Kotick added, "We’re optimistic that today’s ruling signals a path to full regulatory approval elsewhere around the globe, and we stand ready to work with U.K. regulators to address any remaining concerns so our merger can quickly close."
In filing its lawsuit in December 2022 seeking to block the deal, the FTC had said, “With control over Activision’s blockbuster franchises, Microsoft would have both the means and motive to harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely, resulting in harm to consumers.”
The FTC was granted an emergency temporary restraining order blocking Microsoft/Activision Blizzard. In her ruling, Corley noted that the TRO "will dissolve at 11:59 p.m. on July 14, 2023, unless the FTC obtains a stay pending appeal from the Ninth Circuit Court of Appeals."
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