Has the tide finally turned for Microsoft in Activision Blizzard buyout?

Microsoft has won its FTC fight to buy Activision Blizzard. Judge Corley has denied the FTC’s preliminary injunction request.

Microsoft’s acquisition of Activision Blizzard has stirred controversy and kept the games industry agenda worldwide busy for a while. Files were suited in multiple countries and cases, mostly claiming that the buyout would pave the way for or even solidify Microsoft’s position as a monopoly in the game industry. The claims primarily revolved around the ownership of the worldwide known franchise, The Call of Duty. The situation looked bleak for Microsoft for a long while, but the tide seems to be finally turning for the company as a California judge ruled in favor of Microsoft.

Judge Jacqueline Scott Corley has sided with Microsoft in their assurances to maintain Call of Duty’s presence on PlayStation and explore its expansion onto the Nintendo Switch platform. Despite the Federal Trade Commission (FTC) raising objections concerning Microsoft’s cloud agreements, Judge Corley duly acknowledged these agreements in her deliberation. In principle, the court’s verdict concurs with Microsoft’s perspective on the Nintendo Switch’s inclusion within the console market. However, it acknowledges the FTC’s plausible contention that the Nintendo Switch may not fit this categorization. Additionally, Judge Corley has concurred with the FTC’s assertion that the console market excludes personal computers (PCs).

In a ruling submitted today, Judge Corley said the following:

“Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: 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. This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, 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. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore denied.”

Microsoft hasn’t been sitting on its hands while game industry and legal systems in multiple countries have been stirred with this buyout. The company made so many deals, mostly with cloud and cloud gaming services, hoping to convince the authorities that the company had no intention of becoming a monopoly or any monopolistic agenda. 

Bobby Kotick, Activision Blizzard’s CEO, said in a statement: 

“Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”

Microsoft president Brad Smith said the company was grateful to the Court in San Francisco for a quick and thorough decision and hoped other jurisdictions would continue working towards a timely resolution.

According to Judge Corley’s statement, Microsoft’s efforts to prove it had no monopolistic agenda had the intended effect. Still, there is no way to be sure if this strategy will keep working in the long run. Obviously, though, this is good news for the company. Although the UK court ruled against the buyout, the European regulators ruled in favor of the buyout; there seems to be light at the end of the tunnel at last because Microsoft could now technically close without the UK and without an injunction in the US preventing it.

Microsoft is still far from the touchdown since FTC has the chance to appeal the decision, and it gives very mixed signals on the topic. First, this would be the second significant loss for FTC Chair Lina Khan as the head of the regulator if the court order stands, and she has been after big tech companies since she was appointed the head of the agency in 2021. But there is also the fact that FTC didn’t appeal a court’s decision permitting Meta to acquire Within, so it may happen again. 

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