In a turn of events that is poised to shake up the tech industry, a California judge has given Microsoft the thumbs up to finalize its mammoth acquisition of Activision Blizzard. Despite five intense days of testimony and an ongoing antitrust case spearheaded by the Federal Trade Commission (FTC), Microsoft has emerged victorious with Judge Jacqueline Scott Corley denying the regulator’s plea for a preliminary injunction.
Judge Corley’s ruling, submitted today, underscores her conviction that the acquisition, despite being the largest in tech history, merits serious scrutiny. Her ruling states that Microsoft has been transparent and committed to keeping Activision’s crown jewel, Call of Duty, accessible to PlayStation users and expanding its availability to Nintendo Switch, among other commitments. This, she believes, points to increased consumer access rather than a potential reduction in competition.
Microsoft’s Response to the Ruling
Responding to the decision, Microsoft President Brad Smith expressed gratitude for the quick and thorough ruling, hoping for similar outcomes from other jurisdictions. Phil Spencer, head of Xbox and key witness in the trial, took to Twitter, asserting that the deal benefits the gaming industry, contradicting the FTC’s allegations about potential negative impacts on console switching, subscription services, and cloud gaming.
Activision Blizzard Welcomes the Verdict
Following suit, Activision Blizzard’s CEO, Bobby Kotick, embraced the court’s decision, arguing that the merger will enhance competition rather than allowing established market leaders to monopolize the fast-evolving industry.
However, the FTC’s spokesperson Douglas Farrar expressed disappointment, reiterating the regulator’s concern about the potential impact of the merger on competition in cloud gaming, subscription services, and consoles. The FTC is planning its next course of action to protect consumers and preserve competition.
The Deal’s Future amid UK Objections
Despite the positive ruling, Microsoft still has to navigate the UK Competition and Markets Authority’s (CMA) resistance to the deal. The UK regulator has sought to block the acquisition, and Microsoft is currently appealing the decision. A hearing is set for July 28th, but if the companies can negotiate a remedy with the CMA, the deal can close ahead of the July 18th deadline.
In the midst of the FTC-Microsoft battle, Microsoft has been seeking ways to close the deal despite the UK regulator’s block. Following Judge Corley’s ruling, both Microsoft and CMA have agreed to temporarily halt their legal battle to negotiate potential modifications to the deal, addressing the CMA’s cloud gaming concerns.
FTC’s Next Move
The FTC now has the opportunity to appeal Judge Corley’s decision until July 14th, but given its past track record with Meta’s acquisition of Within, it may instead decide to abandon the case. Should the court order stand, it would mark the second significant defeat for FTC Chair Lina Khan, who has been tackling Big Tech companies since her appointment in 2021.