Federal Judge Jacqueline Scott Corley has ruled against the Federal Trade Commission’s attempt to block Microsoft from closing its $US69 billion acquisition of Activision Blizzard until it can be fully reviewed, freeing up the companies to complete the deal before a July 18 deadline, and potentially paving the way for them to dramatically reshape the future of gaming in the years to come.
Judge Corley writes in her 53-page decision:
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.
“We’re grateful to the court for swiftly deciding in our favour,” Microsoft Gaming CEO Phil Spencer tweeted after the decision was announced. “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.”
The decision comes after a five-day hearing in the Northern District Court of California which included testimony and major revelations from high-ranking industry figures ranging from Spencer to Sony Interactive Gaming CEO Jim Ryan. The FTC tried to argue that Microsoft’s deal to buy Activision Blizzard would have wide-ranging consequences that would harm consumers and lead to less competition in the console gaming market, while Microsoft defended the acquisition, claiming it was a necessary strategic move to counter Sony’s dominance with the PlayStation 5.Much of the proceedings revolved around debating whether high-end console gaming — Xbox and PlayStation — should be considered separately from PC, Nintendo Switch, and other hardware, and whether franchises like Call of Duty are popular and profitable enough to single-handedly swing momentum from one company to another. At one point while on the stand, Spencer even held up his hand and promised the court that he would not remove Call of Duty from PS5, even as Microsoft and Sony struggled to agree to future licensing terms for the franchise behind closed doors.
Testimony during the trial revealed plenty of gamesmanship on both sides, as well as interesting details about other attempted acquisitions and exclusivity deals. Prior to making an offer for Activision, court documents revealed that Microsoft had also discussed buying Japanese publishers Sega and Square Enix. Corporate emails also showed that executives at the tech giant often discussed making new games exclusive, like Bethesda Software’s upcoming Indiana Jones project, in order to compete with Sony’s opposing deals.
The Activision Blizzard acquisition has cleared regulatory hurdles in most major markets, including Brazil, Japan, and the European Union, but was notably blocked by the Competition and Markets Authority in the UK. Microsoft and Activision are currently seeking an expedited appeal of that decision after rejecting the agency’s analysis of its current success in the subscription cloud gaming market with xCloud and Game Pass.
Leave a Reply