A California judge ruled on July 11 that the Federal Trade Commission (FTC) cannot block the proposed acquisition of video game creator Activision Blizzard (ATVI) -) by Microsoft (MSFT) -).
But Microsoft's proposed acquisition of Activision Blizzard has a long and storied history, with many countries and jurisdictions criticizing the deal as anticompetitive. So, now that a California judge ruled in favor of the merger, is the Microsoft Activision deal going through? And how much did Microsoft pay for Activision Blizzard?
Is the Microsoft Activision Blizzard Deal Going Through?
Judge Jacqueline Scott Corley on July 11 ruled that the FTC has not convincingly proven that the Microsoft Activision deal would significantly hurt competition in the video, console and gaming space.
"To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content," Corley said in the decision, citing the deal as one of the "largest in tech history," which "deserves scrutiny."
Still, Corley ruled that the deal was not anticompetitive. The FTC had been seeking an injunction to stop the merger and had also filed a lawsuit to stop it in August.
"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, and "the motion for a preliminary injunction is therefore denied," Corley said.
The ruling is a blow to the Biden Administration's crusade against anticompetitive mergers and acquisitions. The head of the FTC -- Chairwoman Lina Khan has been vocal about preventing monopolies and trustbusting large, incumbent companies with perceived strangleholds on competition. Under her leadership, the FTC has also sued to stop the NVIDIA-Arm merger and Meta's proposed purchase of virtual reality startup Within.
Why Was the FTC Trying to Stop the Activision Blizzard Microsoft Deal?
The FTC based its legal argument around gaming consoles Xbox and Playstation. It argued that, if Microsoft (which owns Xbox) bought Activision Blizzard, it could gate-keep its newly-acquired games, including "Call of Duty," and other popular franchises, or tinker with the games' quality on other platforms (for example, on Playstation, which is owned by competitor Sony).
However, that argument proved not to hold up in court, and the FTC is now prohibited from blocking the merger from going through.
In her ruling, Corley said "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 for the first-time to bring Activision’s content to several cloud gaming services."
For their part, both Microsoft and Activision are excited about the merger getting the green light.
"It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry," Activision Blizzard Chief Executive Bobby Kotick said in a statement.
How Much Did Microsoft Pay for Activision Blizzard?
Microsoft's proposed buyout of Activision Blizzard was first made public in January 2022. The tech giant said it would pay $68.7 billion -- or roughly $95 per share -- to bring Activision, Blizzard Entertainment, and King under the the Microsoft Gaming umbrella, also called Xbox Game Studios.
Microsoft's proposed a $69 billion takeover was nearly 18 months ago. At the time, it announced it would pay for the creator of "Call of Duty," and "Candy Crush," in all-cash for approximately $95 per share. Most recently, Activision Blizzard has been trading for between $70-$92 per share.
Still, the original deal was proposed in January 2022, and much has changed since then. Some expect Activision may try to renegotiate the terms of the deal, citing outsized growth over the past 18 months.
The deal must close by July 18, 2023, under a contractual deadline. The FTC may still appeal the Judge's decision, though it is not expected to do so.
But Microsoft is a global company, and just because it won a key battle in the US does not mean it's all smooth sailing from here. The UK's Competition and Markets Authority has voiced similar concerns to the FTC, opposing the deal in April, which Microsoft appealed. It will get a hearing at the UK’s Competition Appeal Tribunal later in the summer.
