Microsoft’s efforts to seal its blockbuster deal to acquire Activision Blizzard just got a major victory by getting the green light to go forward in the US. A California judge denied the motion by the Federal Trust Commission (FTC) for a preliminary injunction to stop the Microsoft-Activision deal after listening to arguments from both Microsoft and the FTC.
For those who missed it, the FTC had earlier asked Corley to issue an injunction that put a temporary halt on Microsoft and Activision closing the deal before the FTC’s in-house judge could review it. In December, it had also filed a suit to block the deal and have an administrative law judge at the agency assess it.
“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,” Judge Jacqueline Scott Corley informed. “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.”
“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,” Activision CEO Bobby Kotick said in a written statement.
This development comes on the heels of the July 18 deadline that was set for the completion of the deal, and after five days of court hearings to assess whether the acquisition will be completed or not. With Microsoft getting the green signal to seal what is effectively the largest-ever deal in the gaming arena – $69 billion – in every region apart from the UK, the tech titan will be eager to complete the acquisition in time. Otherwise, Microsoft has to pay Activision a breakup fee of $3 billion, as part of the takeover agreement signed between the two enterprises 18 months ago.
“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,” Brad Smith, Microsoft’s president and vice chair, said in a statement, hailing the decision. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”
Of course, the coast is not clear for Microsoft yet. The FTC is now clear to file its appeal of the decision to federal appellate court, and Microsoft and Activision are yet to get the Competition and Markets Authority (CMA) to approve the multi-billion-dollar acquisition. This blockbuster acquisition, once completed, is set to consolidate Microsoft’s position as a major player in the gaming industry.
By adding Activision Blizzard’s portfolio, which includes popular franchises like Call of Duty, World of Warcraft, and Overwatch, Microsoft is on the path to strengthen its market share and gain a competitive edge over its rivals, which can potentially reshape the competitive landscape. Furthermore, with Activision Blizzard’s diverse portfolio, Microsoft can further enhance cross-platform integration and offer seamless gaming experiences across Xbox consoles, PC, and other platforms. This can contribute to increased engagement by players.