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It looks like Microsoft’s $69 billion Activision Blizzard acquisition is going through after all.
Microsoft’s acquisition of Activision-Blizzard-King is now poised to go through, following the company’s win today in the FTC’s case against the deal. A California judge ruled that Microsoft would be allowed to close the acquisition after five whole days of testimony in court, denying the FTC a preliminary injunction.
In simple terms: the FTC hoped to file a preliminary injunction to block the deal from going through temporarily, so further investigation could be carried out. Seeing as Microsoft has a set deadline of July 18 for the deal to go through, however, this injunction would have destroyed any chance of the company meeting that deadline and it would have fallen through. Now, the path is cleared for Microsoft to acquire Activision Blizzard.
Via The Verge, California Judge Corley said in the ruling earlier today:
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.
After a long series of testimonies voiced out in court, the judge ruled that Microsoft has committed to keeping Call of Duty on PlayStation and Nintendo Switch, which means that the franchise would not impact the competing console makers. This was a blow to the FTC, given that they had built a case against Microsoft almost entirely on the basis that the acquisition would hurt PlayStation by turning Call of Duty - and other features like cloud gaming - exclusive.
In response to the ruling, Xbox boss Phil Spencer tweeted, “We're grateful to the court for swiftly deciding in our favour. 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.”
The FTC isn’t giving up, however. According to The Verge, an FTC spokesperson said:
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.
Microsoft’s path to acquiring Activision Blizzard is now clear of its biggest roadblock, but a few more still remain. UK regulator The CMA also rejected the acquisition recently, and a hearing between them and Microsoft is set for July 28 - 10 days after the deal has to close. After today’s ruling, both parties have agreed to negotiate the terms of the Activision Blizzard acquisition to better address the CMA’s main concerns against it, which lie in the issue of cloud gaming exclusivity. With their case on pause, a successful negotiation could be all Microsoft needs to seal the deal now.
We’ll know more about the acquisition’s success in the coming weeks, but Microsoft is clearly happy with today’s results in court.