Judge Blocks FTC From Preventing Microsoft’s Activision Bid

The Federal Trade Commission’s battle with Microsoft has been put to rest. A judge with the US District Court for the Northern District of California shared Tuesday that she’d sided with Microsoft in its efforts to acquire Activision Blizzard, effectively blocking the FTC from continuing to delay the deal. The decision represents the removal of one of Microsoft’s most significant hurdles throughout its year-and-a-half-long bid. 

The FTC sought an injunction to block the $67.7 billion acquisition in June. Citing multiple antitrust laws, the FTC argued that it needed time to investigate whether Microsoft’s Activision absorption would hinder competition within the industry. After five days of testimony from both Microsoft and the FTC, Judge Jacqueline Corley has determined that the deal—one of the largest in gaming history—won’t “substantially lessen competition.”

In her 53-page ruling, Judge Corley referred to months of back-and-forth between Microsoft, Sony, and Nintendo regarding major Activision titles—Call of Duty. “The gist of the FTC’s complaint is Call of Duty is so popular, and such an important supply for any video game platform, that the combined firm is probably going to foreclose it from its rivals for its own economic benefit to consumers’ detriment,” she wrote. “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…The record evidence points to more consumer access to Call of Duty and other Activision content.”

Credit: Chris Taljaard/Unsplash

While this doesn’t quite mean the acquisition is ready to go through, some expect that other regulators, like the United Kingdom’s Competition and Markets Authority (CMA), will reconsider their takes on the deal enough to allow it to proceed. The CMA announced in April that it did not approve of the acquisition for reasons similar to the FTC’s own, arguing Microsoft’s potential effect on the cloud gaming market would “undermine innovation.” 

Microsoft president Brad Smith confirmed Tuesday morning that the company would turn its attention back to fighting the CMA. In a statement shared on Twitter, Smith said Microsoft was looking at ways to modify the transaction so that the CMA’s concerns might be assuaged. 

The FTC, meanwhile, is displeased with Judge Corley’s decision. “We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles,” the Commission said in a statement. “In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”