We now return you to the endless saga of Microsoft trying to slurp up Activision-Blizzard to rescue it from ignominy as regulatory factions around the globe post their objections of varying magnitude and sincerity. The latest entry in the drama involves the US Federal Trade Commission, which has already blocked the merger, prompting a lawsuit. And indeed, a lawsuit has just been decided, but not that lawsuit. That lawsuit is still at least theoretically slated for hearings in August, and we still don’t know who will triumph if it isn’t abandoned as moot.
But today’s suit was very much decided in Microsoft’s favor. Readers will recall that a month ago, the FTC asked the US District Court of Northern California to pre-emptively block Microsoft and Activision-Blizzard from “consummating” the acquisition – i.e., inking the deal – even as litigation was pending. Though the court did grant the temporary restraining order, it has now denied the request for an injunction, which effectively allows the two companies to march forward to said consummation. Here’s a chunk of Judge Jacqueline Scott Corley’s ruling, which not only tosses the request for an injunction blocking the deal but suggests that the FTC will also fail in its overall legal quest.
“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 FTC may still appeal this decision, and of course the UK’s CMA has also blocked the deal; Microsoft has appealed, and the hearing is set for July 28th – after the July 18th consummation deadline. As The Verge notes, it’s likely that deadline will be extended past the CMA hearing. [See the end of this piece for an update on this.]
“We are 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,” the FTC says.
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
Our statement on today's decision: pic.twitter.com/jRDD8PhBeT
— Brad Smith (@BradSmi) July 11, 2023