Microsoft-Activision Deal Dodges Major Roadblock As Federal Court Rules Against The FTC In Anti-Trust Case
In a devastating blow to the entire medium of video games, a federal court has officially ruled against the American Federal Trade Commission (FTC)’s efforts to block Microsoft’s desired acquisition of Activision-Blizzard.
Handing down her decision on the morning of July 11th, Northern California District Judge Jacqueline Scott Corley – who notably refused to recuse herself from the case despite her son being currently employed at the tech giant – reasoned that the deal did not violate any anti-trust laws because “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,” Judge Corley affirmed. “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 [above], 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,” she then asserted. “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.”
With this decision, the only barrier now standing in the way of Microsoft completing their purchase of the Overwatch 2 parent company is United Kingdom’s own antitrust agency, the Competition and Markets Authority (CMA), who in April blocked the deal out of a concern that it could “alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”
While all parties were due back in court on July 28th to hear Microsoft’s appeal of the decision, in light of the FTC’s court loss, those involved have now agreed to put a temporary ‘pause’ on the case in order to allow the companies to reconfigure their proposals in order to appease the UK regulators.
“After today’s court decision in the U.S., our focus now turns back to the UK,” wrote Microsoft president Brad Smith in a public statement. “While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA.”
To this end, Smith revealed that “in order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”
In a statement to The Verge, the CMA confirmed that they were “ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our Final Report.”
Further, following Judge Corley’s decision, Xbox head Phil Spencer took to Twitter to express his gratitude “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,” wrote Spencer.
“Since we first announced this deal, our commitment to bringing more games to more people on more devices has only grown,” he continued. “We’ve signed multiple agreements to make Activision Blizzard’s games, Xbox first party games and Game Pass all available to more players than they are today.”
Closing out his thoughts, Spencer added, “We know that players around the world have been watching this case closely and I’m proud of our efforts to expand player access and choice throughout this journey.”
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