The USA’s Federal Trade Commission (FTC) has announced its intention to appeal against a San Francisco judge’s denial of a temporary injunction in its case against Microsoft’s acquisition of Activision Blizzard, reports the BBC.
Microsoft announced its intention to acquire Activision Blizzard last year in what would be the biggest gaming acquisition of all time, at $67.8 billion. The aim of the deal, Microsoft claims, is Activision Blizzard’s mobile strength, King included, which would accelerate the tech giant’s movement within the world of mobile.
However, legislators and competitors worldwide have proven harder to convince, and have moved against the deal due to its potential implication on competitors in the console space, as well as the potential that the deal would give Microsoft an unfair advantage in cloud gaming.
Ironically, this focus has seen the FTC overlook attempts to block the deal within the mobile space, such as Google’s concerns that Microsoft could make King titles exclusive to its own in-development app store.
The FTC requested a preliminary injunction, blocking Microsoft and Activision Blizzard from finalising the acquisition ahead of its antitrust case against the deal going to court on August 2. This would essentially prevent the merger from moving ahead prior to receiving approval.
Notably, the court date of August 2 is after the contractual deadline of July 18, which would essentially force Microsoft and Activision to sign a new deal before proceeding. This could potentially see the companies fail to reach a new agreement.
For example, Activision Blizzard may demand more money, or step away from the table entirely.
Although both companies appear committed to the deal, Activision Blizzard notably wrote in its most recent letter to shareholders that the deal could be abandoned should any action be taken "by any governmental authority of competent jurisdiction, that… prohibits, makes illegal or enjoins the consummation of the merger and has become final and non-appealable".
With the injunction being denied, a path opened for the companies to finalise the deal, essentially gambling that it would receive the approval - or else they would be prevented, at least temporarily, from selling Activision Blizzard products in the USA.
Closing in on the end
In her ruling, US judge Jacqueline Scott Corley said she didn’t believe that the FTC would win the upcoming case, and didn’t believe the FTC’s assertion that the deal would negatively affect consumers.
“Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services.
"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."
In a statement, Microsoft president Brad Smith said "We're disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward."
We listed Activision Blizzard as one of the top 50 mobile game makers of 2022. We'll be revealing our list for 2022 in the coming months.