Microsoft wins FTC fight to acquire Activision Blizzard.

The legal dispute between the Federal Trade Commission and Microsoft has concluded, with the judge ruling against the FTC’s request for a preliminary injunction. 

After an intense five-day trial, a California judge, Jacqueline Scott Corley, has granted Microsoft permission to proceed with its acquisition of Activision Blizzard. Despite an ongoing antitrust case from the Federal Trade Commission, Judge Corley carefully considered arguments from both the FTC and Microsoft and ultimately rejected the regulator’s plea for a preliminary injunction.

In a ruling submitted, Judge Corley said the following:

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. 

In her ruling, Judge Corley has shown clear support for Microsoft’s assurances to maintain Call of Duty on PlayStation and explore its availability on Nintendo Switch. While the FTC raised concerns about Microsoft’s cloud agreements, Judge Corley carefully considered them when making her decision. The court ruling acknowledges Microsoft’s argument regarding the inclusion of Nintendo Switch in the console market, while also recognizing the FTC’s reasonable claim that it may not be. Additionally, Judge Corley agrees with the FTC’s stance that the console market does not encompass PCs.

After Judge Corley’s ruling, Microsoft President Brad Smith expressed gratitude to the San Francisco court for their prompt and comprehensive decision, expressing hope that other jurisdictions would also work towards a timely resolution.

Phil Spencer, the head of Xbox and a crucial witness in the trial, shared his reaction on Twitter. Spencer stated, “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,”

Our statement on today’s decision: pic.twitter.com/jRDD8PhBeT

— Brad Smith (@BradSmi) July 11, 2023

FTC spokesperson Douglas Farrar expressed disappointment in the outcome and stated that the FTC is considering its next course of action. Farrar emphasized the perceived threat to open competition in cloud gaming, subscription services, and consoles posed by the merger. He mentioned that the FTC would announce their next steps in the coming days as they continue their fight to uphold competition and protect consumers.

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

With the judge’s ruling, Microsoft is now allowed to finalize the Activision Blizzard deal before the July 18th deadline, provided that the company closes around the UK or negotiates some form of remedy with the Competition and Markets Authority (CMA). The UK regulator had previously attempted to block Microsoft’s proposed acquisition in April, and Microsoft is currently appealing that decision. A hearing for the appeal is scheduled to commence on July 28th.