M&A: Microsoft wins fight to buy Activision Blizzard
After five days of intense testimonies, a California judge has given Microsoft the green light to finalize its acquisition of Activision Blizzard. The decision comes amidst an ongoing antitrust case filed by the Federal Trade Commission (FTC). However, Judge Jacqueline Scott Corley denied the FTC’s request for a preliminary injunction after hearing arguments from both parties.
In her ruling, Judge Corley acknowledged the significance of Microsoft’s acquisition of Activision, describing it as the largest in tech history. She emphasized the need for scrutiny, but ultimately concluded that Microsoft’s commitments to preserving Call of Duty on PlayStation for a decade, ensuring parity with Xbox, and expanding the game to Nintendo Switch, along with agreements to bring Activision’s content to various cloud gaming services, were sufficient. The judge stated that the FTC failed to demonstrate a likelihood of prevailing in its claim that the merger would substantially lessen competition. She noted that the evidence instead pointed to increased consumer access to Call of Duty and other Activision content.
(Source – SiGMA)
Microsoft commited to multi-platforms
Judge Corley’s decision clearly aligns with Microsoft’s commitments to multi-platform availability and expansion, even considering the FTC’s challenges to Microsoft’s cloud agreements. The ruling acknowledges the concept of Nintendo Switch as part of the console market, while also recognizing the FTC’s argument that PCs should not be included.
Following the decision, Microsoft President Brad Smith expressed gratitude to the court for its prompt and thorough ruling. Xbox Head Phil Spencer, a key witness in the trial, tweeted his appreciation, stating that the evidence presented demonstrated the benefits of the Activision Blizzard deal for the gaming industry. Activision Blizzard CEO Bobby Kotick also welcomed the ruling, highlighting the merger’s potential to foster competition and empower consumers.
In response, FTC spokesperson Douglas Farrar expressed disappointment and hinted at further action to preserve competition and protect consumers. However, the FTC now has the opportunity to appeal Judge Corley’s decision until 14 July. Given the regulator’s decision not to appeal a similar court ruling in Meta’s acquisition of Within, it remains uncertain if the FTC will continue its case against the acquicion by Microsoft of Activision Blizzard.
While the California ruling allows Microsoft to proceed with the acquisition before the 18 deadline, the deal’s completion hinges on negotiations with the UK Competition and Markets Authority (CMA). Microsoft had faced opposition from the CMA since April, prompting the FTC to seek an injunction initially. The UK regulator’s request to delay Microsoft’s appeal of the Activision Blizzard acquisition decision was rejected by the Competition Appeal Tribunal (CAT) due to concerns over fairness.
Legal battle paused in UK
Microsoft had been exploring options to close the Activision Blizzard deal despite the UK regulator’s opposition. This development, along with the CMA’s attempt to delay Microsoft’s appeal during the FTC proceedings, led to concerns and the initial request for an injunction. However, the willingness of Microsoft and the CMA to pause their legal battle and negotiate a remedy suggests a potential resolution in the UK.
In a surprising move, both Microsoft and the CMA agreed to pause their legal battle in the UK and explore modifications to address the CMA’s concerns regarding cloud gaming. The CAT’s approval is required for this pause, indicating a mutual willingness to find a resolution.
Although European regulators approved the deal in May, Microsoft’s ability to proceed without the UK and without a US injunction complicates matters. Both Microsoft and the CMA are actively seeking to avoid this conflict.
FTC Chair Lina Khan, who has been pursuing Big Tech companies since assuming her role in 2021, faces another potential setback if the court order remains unchallenged. The outcome of the FTC’s decision will become clearer in the days leading up to July 14th.
