Microsoft Wins FTC Case Over Activision Acquisition

Microsoft Wins FTC Case Over Activision Acquisition

After a long testimony full of various emails, poorly redacted documents, and bickering over exclusivity, a California judge is allowing Microsoft to close its acquisition of Activision Blizzard.

Microsoft has some more work to do, though

As reported by The Verge, Judge Jacqueline Scott Corley ruled in favor of Microsoft over the Federal Trade Commission. Her statement lays out the ruling, citing the deals Microsoft made to keep Call of Duty on other platforms (and bring it to the Nintendo Switch):

“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.”

A few Microsoft and Xbox executives reacted warmly to the news. Xbox CEO Phil Spencer tweeted that he was “grateful” for the decision and said it was “good for the industry.”

President Brad Smith also tweeted that he was grateful for the swift decision. Activision CEO Bobby Kotick even released a positive statement. Kotick, who was reportedly aware of abuse happening at Activision and allegedly left a voicemail that threatened to have an assistant killed, said this merger would benefit the workers.

“Our merger will benefit consumers and workers,” said Kotick. “It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”

The FTC, understandably, wasn’t as elated. And while the FTC can appeal the decision until 11:59 p.m. PT on July 14, FTC spokesperson Douglas Farrar noted that the commission was looking to its next stage of this fight.

“We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles,” said Farrar. “In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”

Corley’s ruling lets Microsoft close the deal ahead of its July 18 deadline, but it still has to deal with the United Kingdom. The Competition and Markets Authority is still standing in the way, but it’s possible the two parties will negotiate some sort of deal. The CMA moved to block the deal back in April, but Microsoft is reportedly looking to sealing the deal anyway.

Following Corley’s ruling, the CMA and Microsoft, as reported by The Verge, have agreed to halt their battle in order to negotiate and look at the CMA’s concerns around cloud gaming. Smith even tweeted that Microsoft is looking into ways to alter the deal to appease the CMA.

The CMA confirmed this to The Verge, noting that it was “ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in [its] Final Report.” The Competition Appeal Tribunal has to decide on whether this goes forward, but it will likely be approved, as the CAT denied the CMA the ability to delay Microsoft’s appeal of its decision regarding the Activision acquisition.