A California judge has granted Microsoft permission to proceed with its acquisition of Activision Blizzard after a five-day hearing, marking a significant victory for the tech giant.
Despite facing an ongoing antitrust case by the Federal Trade Commission (FTC), Judge Jacqueline Scott Corley denied the regulator’s request for a preliminary injunction, allowing the merger to move forward. Microsoft’s commitment to keeping Call of Duty on PlayStation and expanding it to Nintendo Switch played a pivotal role in the court’s decision.
Judge’s Decision and Reactions
In her ruling, Judge Corley emphasized that Microsoft had made explicit commitments to maintain Call of Duty on PlayStation for the next ten years and extend the game to Nintendo Switch. She also acknowledged Microsoft’s agreements to bring Activision’s content to various cloud gaming services.
The judge concluded that the FTC had not shown sufficient evidence to support its claim that the merger would substantially reduce competition. Microsoft President Brad Smith expressed gratitude for the court’s decision, while Xbox Head Phil Spencer tweeted that the evidence presented had debunked the FTC’s claims about the gaming market.
Pause in the UK Legal Battle
Microsoft and the UK’s Competition and Markets Authority (CMA) have agreed to temporarily halt their legal battle to negotiate further. This pause aims to address the CMA’s concerns regarding cloud gaming.
Microsoft is considering modifying the transaction to address these concerns, and both parties have jointly submitted a request to the Competition Appeal Tribunal for the pause. The CMA stated its willingness to review any proposals from Microsoft that would mitigate its concerns.
Possible Challenges Ahead
Although European regulators approved the deal in May, the CMA’s rejection has posed a significant obstacle for Microsoft’s acquisition of Activision Blizzard. While the European approval allows Microsoft to proceed without the UK’s involvement, the tech giant aims to find a resolution with the CMA to ensure a smoother outcome.
The FTC has until July 14th to appeal Judge Corley’s decision, but its previous non-appeal in a similar case involving Meta’s acquisition suggests it may not pursue further action.
Blizzard CEO Bobby Kotick, in an email to employees, said:
Today, a U.S. federal judge ruled in our favor, denying the Federal Trade Commission’s attempt to block our merger with Microsoft.
We’re grateful to the court for the way this process was handled and the thoughtfulness of the decision. The U.S. joins the 38 countries where our deal can proceed—these decisions are based on facts and data that show our merger is good for players and for competition in the industry.
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 UK regulators to address any remaining concerns, so our merger can quickly close.