A U.S. judge on Tuesday denied the Federal Trade Commission’s (FTC) request for a preliminary injection and gave Microsoft the approval to proceed with its $69 billion acquisition of Activision Blizzard. If the deal is sealed, it will become the biggest ever in the gaming industry. The FTC had initially asked Judge Jacqueline Scott Corley to stop the deal, citing concerns that Microsoft would have exclusive access to the hugely popular Call of Duty franchise.
The statement released by Judge Corley goes as follows:
Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services. This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. 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. 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.
The Californian court gave the FTC until this Friday to appeal the decision. The ruling represents a setback for President Biden’s effort to tighten antitrust enforcement. After the ruling, FTC spokesperson Douglas Farrar said the body was “disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”
Following the judge’s decision, Microsoft president Brad Smith in a statement, 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.” Xbox chief Phil Spencer reacted in a series of tweets. “We’re grateful to the court for swiftly deciding in our favour. 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,” Spencer said.
After initially opposing the acquisition, Britain’s Competition and Markets Authority (CMA) said it is open to changing its stance if Microsoft is ready to address its concerns. Microsoft’s Brad Smith released a statement that the company is “considering how the transaction might be modified in order to address” the concerns to a level deemed “acceptable to the CMA.”
