In a significant legal victory, a federal judge has ruled in favor of Microsoft, allowing the tech giant to move forward with its planned $69 billion acquisition of video game company Activision Blizzard. The decision by the US District Court for the Northern District of California rejects the request for a temporary injunction by the Federal Trade Commission (FTC), which sought to halt the merger while legal challenges were underway.
The court’s ruling means that Microsoft is now set to become the world’s third largest video game publisher, gaining control over popular franchises like “Call of Duty,” “World of Warcraft,” and “Diablo.” The judge, Jacqueline Scott Corley, stated that the government had failed to prove that the merger would lead to the withdrawal of games from platforms such as Sony’s PlayStation or significantly harm competition in the video game library subscription and cloud gaming markets. “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, vice chair and president at Microsoft, said in a statement Tuesday. “
The decision gives Microsoft the opportunity to finalize the deal with Activision in the coming days, potentially ahead of the July 18 contractual deadline. The company has assured regulators that it will not restrict access to games like “Call of Duty” for competitors, and it has even signed licensing agreements with other companies like Nvidia and Nintendo to ensure availability on their platforms.
The FTC’s argument for an injunction stemmed from concerns that Microsoft’s control over popular game franchises would stifle competition. However, the court found that the agency failed to provide evidence that Microsoft would have an incentive to keep games exclusive to its own platforms. The judge emphasized Microsoft’s commitment to making “Call of Duty” available on other platforms, such as PlayStation and Nintendo Switch.
Microsoft welcomed the court’s decision, expressing gratitude and stating its commitment to addressing regulatory concerns. “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, vice chair and president at Microsoft, said in a statement Tuesday. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”
Activision Blizzard’s CEO, Bobby Kotick, also welcomed the merger, seeing it as a catalyst for competition in the rapidly growing gaming industry. He said “will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
The outcome of this court battle could lead the FTC to drop its in-house merger challenge and abandon its opposition to the Microsoft-Activision deal. Similar cases in the past have seen the FTC withdraw its challenges when preliminary injunctions were denied by the court.
“We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles,” Douglas Farrar, a spokesperson for the FTC, said in a statement on Tuesday. “In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”
While the ruling clears the way for the merger in the US, UK officials had previously attempted to block the deal, raising similar concerns. In response, Microsoft has entered into discussions with UK antitrust officials to find solutions that address competition concerns in the country.
As Microsoft prepares to finalize its acquisition of Activision, the gaming industry awaits the potential impact of this landmark merger. The court’s decision signifies a major shift in the gaming landscape, with Microsoft poised to shape the future of video games on a global scale.
