Microsoft just scored a significant win in its quest to shell out a record-breaking $69 billion for games publisher Activision Blizzard, with a San Francisco judge refusing to let the Federal Trade Commission block the deal while it’s investigating it. There also was some encouraging news from the U.K.
Judge Jacqueline Scott Corley, who initially granted the FTC a brief temporary restraining order against the deal last month, denied the FTC a more serious preliminary injunction today—and offered some pretty withering reasoning: “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.” In other words, the FTC’s case will fail, so there’s no reason to hold up the acquisition.
Like the European Union’s antitrust regulators, the judge essentially agreed with Microsoft that its concessions will make the deal kosher—most notably, the company has promised to maintain non-Xbox platforms’ access to Activision’s crown jewel, the Call of Duty franchise, for a decade. This will actually increase consumer access to such titles, Corley said.
“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,” Microsoft president Brad Smith said in response.
This development makes it far more likely that the acquisition will go ahead, though some pretty big hurdles remain. First is the FTC case, which is still a thing—for now. The agency can appeal Corley’s ruling this week, though it’s not yet clear if it will. FTC spokesperson Douglas Farrar expressed disappointment in today's decision, promising that "in the coming days we'll be announcing our next step to continue our fight to preserve competition and protect consumers."
And then there’s the U.K., whose Competition and Markets Authority blocked the deal in April on the grounds that it could help Microsoft take over a cloud-gaming market that's currently small, but growing.
Microsoft and Activision appealed that decision and were due a hearing at the Competition Appeal Tribunal later this month, but, in more late-breaking news, the CMA and the companies just agreed to a stay of litigation as the agency considers Microsoft's proposals for making the deal more CMA-friendly.
The coming days and weeks will provide a clearer picture of the takeover’s prospects, but today’s developments certainly put considerable wind in its sails. Microsoft and Activision have cause to celebrate.
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David Meyer
