After five days of exhausting hearings, a Californian judge approved the purchase and now, Microsoft buys Activision Blizzard. Despite the fact that the Federal Trade Commission is still pursuing an antitrust lawsuit against Microsoft, Judge Jacqueline Scott Corley has rejected the regulator’s request for a preliminary injunction after hearing arguments from both the FTC and Microsoft.
Judge Corley’s judgment, which was submitted today, stated the following:
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.
Under which conditions Microsoft buys Activision Blizzard now?
On its promises to keep Call of Duty on PlayStation and potentially expand the game to the Nintendo Switch, Judge Corley has unmistakably sided with Microsoft. Judge Corley considered Microsoft’s cloud agreements in her ruling despite the FTC disputing them. Even if the court decision recognizes the FTC’s reasonable argument that the Nintendo Switch is not a console, it nevertheless agrees in theory with Microsoft that it is.
Additionally, Judge Corley concurred with the FTC that PCs are not a part of the console market. This suggests that as Microsoft buys Activision Blizzard, the console and PC markets are going to be affected seperately.
Microsoft President Brad Smith said the business was “grateful to the Court in San Francisco for this quick and thorough decision and hope that other jurisdictions will continue working towards a timely resolution” in a statement following Judge Corley’s ruling. Xbox CEO Phil Spencer, a pivotal witness in the case, also responded via Twitter.
“We’re grateful 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,” explained Spencer.
1/We're grateful 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.
— Phil Spencer (@XboxP3) July 11, 2023
In response to the choice, Activision Blizzard has also commented. According to a statement from Bobby Kotick, CEO of Activision Blizzard, “our merger will benefit consumers and workers.” He added: “It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
FTC spokesperson Douglas Farrar said in a statement that the agency was still deciding what to do next. “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,” said Farrar.
Renewed timeline of the acquisition
Following the judge’s decision, there is nothing in the way if Microsoft buys Activision Blizzard ahead of schedule—but only if it’s willing to do so outside of the UK or if the Competition and Markets Authority (CMA) is open to negotiating a remedy. The proposed acquisition by Microsoft was challenged by the UK regulator in April. Microsoft is currently appealing the ruling, and the hearing is scheduled to begin on July 28.
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
Last month, it was revealed that Microsoft was looking into ways to complete the transaction despite the UK ban, which, in part, was what prompted the FTC to seek the injunction in the first place. In the middle of the FTC v. Microsoft hearing, the CMA submitted a request to try and delay Microsoft’s appeal of its Activision Blizzard acquisition judgment. That plea was denied by the Competition Appeal Tribunal (CAT) because it would have extended the appeals procedure from July to October, which was “contrary to justice and fairness.”
Following Judge Corley’s ruling, the CMA and Microsoft have agreed to put their legal dispute in the UK on hold while they discuss how to modify the Activision Blizzard agreement to allay the CMA’s concerns about cloud gaming. Although the CAT must accept this break, it appears that all sides are eager to find a solution in the UK.
Since European regulators approved the transaction in May, if Microsoft buys Activision Blizzard, it could now potentially conclude the transaction without the UK or a US court order blocking it. But that’s a difficult scenario, and it’s obvious that Microsoft and the CMA both want to avoid it.
Prior to 11:59 p.m. PT on July 14, the FTC will have the opportunity to appeal Judge Corley’s ruling. However, because the regulator did not challenge the court’s approval of Meta’s acquisition of Within, it may choose to drop its lawsuit against Microsoft and Activision Blizzard. As mentioned, if Microsoft buys Activision Blizzard, there are not going to be any obstacles on the way.
Lina Khan, chair of the FTC, will suffer her second significant setback as the agency’s chief if the court’s ruling is upheld. Since Khan was appointed director of the agency in 2021 and was subsequently confirmed, she has been pursuing Big Tech corporations.
As Microsoft buys Activision Blizzard, many players all around the world became very excited about the upcoming games and what could this partnership give birth to. What is maybe even more exciting is that Microsoft and NVIDIA signed a deal to bring Game Pass to Nvidia GeForce Now. Since Microsoft buys Activision Blizzard now, the arrival of the games on Nvidia Geforce Now means players are going to need 2 subscriptions to play almost any game they want, with any computer they have.
Featured Image: Credit
