Microsoft Wins Legal Battle with the FTC: Court Approves Activision Acquisition

Microsoft has been given the green light to acquire Activision-Blizzard for a staggering $69 billion. This comes despite the United States Federal Trade Commission‘s (FTC) efforts to halt the deal, which culminated in a request for a federal injunction that coincided with the deadline for the deal’s closure.

The ruling was handed down by Federal Judge Corley, who has allowed the deal to proceed. However, the path forward remains shrouded in uncertainty, and the implications of this decision are yet to be fully understood.

The past few weeks have seen Microsoft and the FTC in a legal battle over the proposed merger with Activision-Blizzard-King (ABK). This deal, if successful, would grant Microsoft control over a host of mega-franchises including Call of Duty, World of Warcraft, Diablo, Candy Crush, and Hearthstone, significantly bolstering Xbox’s position in the gaming market against competitors such as Apple, Google, and PlayStation.

Jim Ryan, the lead of Sony and PlayStation, has been a vocal critic of the deal, rallying global regulators in an attempt to block the merger. The European Union, however, dealt a significant blow to these efforts by approving the merger, albeit with conditions that require Microsoft to support competitors in the cloud gaming market. This is a commitment Microsoft had already pledged to uphold.

The UK‘s Competition and Markets Authority (CMA), backed by the U.S. FTC, managed to block the deal a few weeks ago. While Microsoft could theoretically bypass the UK due to its diminished relevance in global affairs and the video game market, the United States remains a market that Microsoft cannot afford to ignore.

Microsoft has been defending its position in federal court as the FTC sought an injunction. The timing of this request was strategic, designed to inflict maximum damage on the deal. According to the terms of their agreement, Microsoft and ABK must close the deal by July 18, leaving little time for any potential renegotiations. If the deal were to fall apart, Microsoft would be liable to pay ABK $3 billion in damages.

However, Judge Corley ruled in favor of Microsoft, effectively allowing the deal to close. The FTC’s efforts to block the deal have been unsuccessful.

Microsoft President Brad Smith statement on the decision, 

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. As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

Phil Spencer, Xbox head, also weighed in on the decision, stating, 

We’re grateful to the court for swiftly deciding in our favor. The evidence showed the Activision Blizzard deal is good for the industry and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market.

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