Microsoft can close its deal to acquire Activision Blizzard after Judge Jacqueline Scott Corley ruled against granting the US Federal Trade Commission a preliminary injunction it had sought. The regulator had requested the injunction to prevent the deal from closing while it completed its antitrust investigations.
Last month, the Federal Trade Commission filed a lawsuit in federal court to request a restraining order and an injunction to stop Microsoft's acquisition of Activision Blizzard. Shortly afterwards, a restraining order was granted, with testimony set for late June. Both sides came to court to present their cases, with five days of subsequent testimony.
Judge Corley’s ruling stated that such a huge acquisition deal deserved scrutiny, but that Microsoft's negotiations and signed contracts to keep Call of Duty on competing consoles on parity with Xbox over a decade, as well as deals with cloud-based services, show that “the record evidence points to more consumer access to Call of Duty and other Activision content”.
Her decision points to the fact that putting the deal under scrutiny is what likely led to Microsoft’s deals with other platforms in the first place, and this backs up that idea of increased access.
“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.”
If the court had granted the preliminary injunction, the deal may have had to have been renegotiated, since the deadline for closing the deal is next week on July 18th. However, as the UK Competition and Markets Authority Rejected the merger, closing the deal would have to either be done outside the UK, or involve the UK agreeing to negotiate. Both sides have appealed the UK CMA's decision, with a hearing on that case originally set for July 28th. Microsoft and the CMA have announced after the FTC decision that they will pause the appeals process in order to potentially modify the deal to address British regulatory concerns.
Microsoft Vice Chair and President, Brad Smith, released a statement following the ruling, saying that: “We are grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution. As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns”.
Our statement on the mutual request with the CMA for a pause of our appeal in the UK: pic.twitter.com/8Aky2IJjxS
— Brad Smith (@BradSmi) July 11, 2023
An FTC spokesperson, Douglas Farrar, released a statement saying that the agency would continue scrutinizing the deal and planning what comes next. “In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers”, he said.
