Microsoft Beats FTCs Request for Preliminary Injunction to Block Activision Blizzard Deal
Microsoft has won its federal court battle against the US Federal Trade Commission. Four weeks ago, the FTC requested a preliminary injunction to block Microsoft's massive $68.7 billion agreement to acquire Activision Blizzard, the biggest deal in the history of the gaming industry by orders of magnitude.
With the deadline for closure set to July 18th, Judge Jacqueline Scott Corley of the Northern District of California allowed for expedited proceedings and concluded the following:
After considering the parties’ voluminous pre-and-post hearing writing submissions, and having held a five-day evidentiary hearing, the Court DENIES the motion for preliminary injunction. The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.
Over the 53-page-long document, the Judge said that the deal is actually pro-consumer in terms of access to Call of Duty and other Activision content. As she had noted during the hearings, on that count, the regulators have arguably already won without blocking.
[...] The FTC hasn't 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. [...] 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 motion for a preliminary injunction is therefore DENIED.
Microsoft already reacted with statements from Gaming CEO Phil Spencer, who wrote on 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.
Since we first announced this deal, our commitment to bringing more games to more people on more devices has only grown. 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.
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.
Brad Smith, Vice Chair and President at Microsoft, also shared this message on Twitter:
We're grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution. As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.
With the preliminary injunction failed, Microsoft could now technically close the purchase of Activision Blizzard and deal with any fallout later. There are still some pending questions, such as the FTC's internal proceedings (due to begin in August) and, most importantly, the block ordered by UK's Competition and Markets Authority (CMA). Microsoft appealed there, too, and a verdict should take place soon.
However, it is possible that Microsoft could carve out Activision Blizzard's content from the UK version of Game Pass to work around the block if it is not overturned. Today's legal win is poised to make Microsoft bullish about the prospects of closing, especially since the deal already passed in nearly forty countries.
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