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Business Jul 11, 2023
“Call of Duty” video game. | Photo by Fábio Magalhães on Unsplash
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A judge Tuesday approved Microsoft’s proposed $69 billion acquisition of Santa Monica-based Activision Blizzard, potentially allowing for a merger of the tech giant and the video gaming publisher.
A San Francisco federal judge ruled against the U.S. Federal Trade Commission’s attempt to block the deal, saying the agency was not likely to show the merger would cause a significant reduction in competition that would harm consumers. The judge also denied the FTC’s request for a preliminary injunction that would postpone the closing until the conclusion of a court battle.
Microsoft applauded the decision.
“We’re grateful to the Court in San Francisco for this quick and thorough decision,” Brad Smith, the president of Microsoft, tweeted.
Douglas Farr, a spokesman for the FTC, said in a statement that the agency was “disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services and consoles.”
Farr said that “in the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”
The FTC filed papers last month seeking a restraining order to block the deal from being consummated until the conclusion of an FTC administrative lawsuit challenging the sale. The agency argued that a restraining order and preliminary injunction were needed because the two companies have indicated the deal could potentially be finalized “at any time.”
“A preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition during the pendency of the FTC’s administrative proceeding to determine whether the proposed acquisition violates U.S. antitrust law,” according to the court papers.
The proposed $69 billion deal was announced in January 2022, but sparked antitrust concerns and fears of dampening competition for Microsoft’s Xbox gaming console. The FTC announced in December it was launching a legal challenge to the block the sale, saying Microsoft had a history of “acquiring and using valuable gaming content to suppress competition from rival consoles.” That challenge is being heard in an FTC administrative proceeding.
FTC attorneys argued last month that Microsoft and Activision were considering finalizing the sale regardless of that administrative proceeding.
Activision Blizzard is known for developing popular games such as “Call of Duty” and “Candy Crush.”
FTC officials argued that Activision currently offers its games — including “World of Warcraft,” “Diablo” and “Overwatch” — for a variety of gaming consoles, but believes Microsoft may withhold such content from competing game console producers to boost the value and demand for Xbox.
Microsoft officials in December denied such intentions.
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Smith said in a December statement.
“We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
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