Microsoft And Xbox Win Case Against FTC To Acquire Activision Blizzard

California Judge Jacqueline Scott Corley, who heard five days’ worth of testimony from the Federal Trade Commission last month in their case against Microsoft/Xbox for blocking Activision Blizzard acquisitions, has rejected that request. 

Microsoft’s acquisition of Call of Duty for $69 billion was the target of the FTC. The FTC requested a preliminary order to stop the deal. The FTC can appeal this decision until July 14, according to a report by The Verge. Microsoft is now able to complete its purchase of Activision Blizzard ahead of the July 18th deadline. However, it must still figure out what to do about the Competition and Markets Authority’s decision in the U.K. that the deal be blocked due to concerns over cloud gaming. 

Microsoft could theoretically shut down before July 18, without the U.K. being included in the market. Or it could try to negotiate with the CMA, to allay the regulator’s fears, as reported by The Verge. Microsoft will have an opportunity to challenge the decision of regulators on 28 July. The European Commission, which oversees the European Union outside of the U.K. approved the acquisition proposal in May. 

The Judge’s opinion today denying a preliminary injunction is as follows: 

“In December 2022, the FTC initiated an administrative action to block Microsoft’s proposed acquisition of Activision – publisher of the first-person shooter video-game franchise Call of Duty, among other popular video games. FTC complaint: Call of Duty has become so important for video games and is so widely popular that a combined company will probably shut it out of competition for its economic gain, at the expense of consumers. Discovery has ended in this administrative action, and the trial is set to commence on August 2nd 2023 before an FTC judge. 

The FTC has filed a preliminary injunction against the merger four weeks ago. This is pending the completion of FTC’s administrative actions. The merger is scheduled to end on July 18, so expedited procedures were initiated. The court, after considering the parties’ voluminous written submissions pre and post hearing as well as a five day evidentiary hearing has denied the motion for a preliminary injunction. The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.”

After the announcement of the Judge’s decision, Microsoft Vice Chair and President Brad Smith issued the following. statement on Twitter: 

We’re thankful to the Court of San Francisco for its quick, thorough and comprehensive decision. And we hope that other jurisdictions continue their efforts towards a prompt resolution. We have consistently demonstrated that we will work creatively and in collaboration to resolve regulatory concerns.

Xbox’s Phil Spencer is quoted on TwitterToday, regarding the ruling 

We’re thankful to the court that it ruled quickly in our favor. Evidence showed that the Activision Blizzard agreement was good for industry, while the FTC claims regarding console switching, subscription multi-game services and cloud did not reflect reality. We have increased our commitment since the first announcement of this deal to bring games to more players on more platforms. Our commitment to bringing Activision Blizzard games, Xbox games from first parties and Game Pass to as many players as possible has grown since we announced this deal.

“I’m very proud of the efforts we have made to increase player choice and access throughout this journey.” 

Activision Blizzard’s Bobby Kotick, CEO of the company, said in a recent statement. The Verge

“It will be beneficial to consumers as well as workers. This merger will encourage competition and not allow market leaders who have been dominant for decades to dominate a rapidly expanding industry.” 

Play Informer The story will be updated if a statement or comment is received from Activision Blizzard or Kotick about today’s decision. They have also reached out the FTC to get their comment about today’s verdict and will update the article if they receive one. 

The Verge received the following from FTC spokesperson Douglas Farrar: 

This merger is a threat to competition and openness in consoles, cloud gaming, and subscription-based services. Our next steps will be announced in the near future to ensure that we continue to fight against unfair competition, and to safeguard consumers. 

For more about Microsoft’s ongoing efforts to acquire Activision Blizzard, read about how Spencer said it’s been a learning experience back in June and then read about how Microsoft said in December that the FTC violates the constitution by trying to block the acquisition (although it did walk that claim back later). 

During the five days of testimony that happened last month for this case, we learned that Bethesda’s Indiana Jones game will be exclusive to Xbox and PC and that Microsoft had, at one point, considered acquiring Sega, Bungie, IO Interactive, and more to bolster the Xbox audience. 

Are you in agreement with the judge’s decision? Comment below to let us know!