Microsoft Wins FTC Battle Over Activision Blizzard Acquisition – Microsoft

In December 2022, the FTC sued to stop the merger, arguing that it would harm competition and innovation in the video game industry. The agency also alleged that Microsoft and Activision Blizzard planned to close the deal before the FTC could conduct a comprehensive review of its antitrust implications.

But Judge Jacqueline Scott Corley of the US District Court for the Northern District of California ruled in favor of the two companies, saying the FTC had not established that the deal would cause irreparable harm to the industry if it went ahead.

The judge also noted that Microsoft and Activision Blizzard have agreed to a temporary restraining order preventing them from closing the deal until five business days after its ruling or a date set by the court, whichever is later. She further stated that this gave the FTC enough time to appeal its decision or seek other remedies.

Microsoft and Activision Blizzard expressed their satisfaction with the decision and their belief that the agreement would benefit consumers and operators, as well as allow competition in the video game industry. They also hoped that other countries that had not yet agreed to the acquisition would follow suit and agree to the deal soon.

However, it still faces some regulatory hurdles. The UK’s Competition and Markets Authority (CMA) has also challenged the merger, citing concerns about its impact on the cloud gaming services market. The CMA has issued injunctions to prevent Microsoft and Activision Blizzard from combining their businesses or taking actions that could affect competition in the UK.

Microsoft and Activision Blizzard have appealed the CMA’s decision, but the process could take several months. There are even reports that the two companies are considering closing the deal regardless of the situation in the UK, which could lead to legal action from the Capital Markets Authority.

In addition, the FTC lawsuit has not been finalized. The agency has scheduled an administrative hearing for August 2, 2023, where it will try to establish that the merger violates antitrust laws. However, the merger agreement has an expiration date of July 18, 2023, so Microsoft and Activision Blizzard are keen to complete the deal by then. If they fail to do so, Microsoft will have to pay Activision Blizzard $3 billion to break the deal unless they renegotiate the terms.

The merger, announced in January 2022, is one of the largest in gaming history. It will give Microsoft control of some of the most iconic franchises in the industry, including Call of Duty, World of Warcraft, Overwatch, and Candy Crush. It will also boost Microsoft’s Xbox Game Pass subscription service, which provides access to hundreds of games for a monthly fee.

The deal has raised concerns among gamers, video game developers, and regulators about its potential impact on competition, diversity, and creativity in the gaming market. Some critics also pointed to Activision Blizzard’s ongoing problems with workplace harassment and discrimination, which have led to lawsuits, investigations, and protests.

Microsoft said it is committed to working creatively and collaboratively to address any regulatory concerns and will respect Activision Blizzard’s creative independence. The company is also committed to improving Activision Blizzard’s work environment and culture.

Today’s ruling is a big win for Microsoft and Activision Blizzard, but it doesn’t guarantee their merger will go smoothly or quickly as some legal challenges and regulatory scrutiny in other countries still have to be overcome.

Update 20:34 Rapid developments in this matter Shortly after Microsoft won the FTC, the company announced that it had also agreed with British regulators to stop their legal battle over the matter in order to negotiate and find a mutually acceptable solution to complete the acquisition. You can read more here.