Image source: Xbox Game Studios
Microsoft has been granted approval by a California judge to proceed with its acquisition of Activision Blizzard following a five-day testimony. Judge Jacqueline Scott Corley has carefully considered arguments from both parties and has decided against granting the regulator’s request for a preliminary injunction.
Microsoft Wins Court Case vs. FTC to Acquire Activision Blizzard
Judge Corley said on the matter:
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.
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Judge Corley has notably sided with Microsoft regarding its commitments to keep Call of Duty available on PlayStation and extend its reach to the Nintendo Switch. While the FTC challenged Microsoft’s cloud agreements, Judge Corley took them into account when making her decision. The court ruling also aligns with Microsoft’s perspective that the Nintendo Switch should be considered part of the console market, although it acknowledges the FTC’s reasonable claim that it is not.
Additionally, Judge Corley has concurred with the FTC’s stance that the console market does not encompass PCs.
Activision Blizzard has responded to the ruling, with CEO Bobby Kotick stating, “Our merger will bring benefits to consumers and employees. It will foster competition and prevent entrenched market leaders from maintaining dominance in our rapidly growing industry.”
FTC spokesperson Douglas Farrar commented that the FTC is disappointed with the outcome and is currently devising its next steps. Farrar explained, “Given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles, we will announce our next course of action in the coming days as we continue our fight to preserve competition and safeguard consumer interests.”
Related:
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With the judge’s ruling in place, Microsoft can proceed with finalizing the Activision Blizzard acquisition before the July 18th deadline. However, this is conditional upon the company closing around the UK or reaching a negotiated resolution with the Competition and Markets Authority (CMA). In April, the UK regulator moved to block Microsoft’s proposed acquisition, and the company is presently appealing that decision, with a hearing scheduled to commence on July 28.
Activision Blizzard’s latest success story is Diablo 4, a game that has performed exceptionally well both critically and commercially. The publisher also owns Call of Duty, with its battle royale spin-off Warzone continuing to dominate.
