Microsoft has received approval from a federal judge to acquire video game giant Activision Blizzard for $69 billion, making it the third-largest video game publisher globally. The deal will grant Microsoft control over popular franchises such as “Call of Duty,” “World of Warcraft,” and “Diablo.” The US District Court for the Northern District of California denied the Federal Trade Commission’s (FTC) request for a temporary injunction while legal challenges to the merger unfold. The court ruling clears the path for Microsoft to close the deal, which could take place in a matter of days.
The Legal Battle Over the Acquisition
The acquisition has been the subject of a legal battle between Microsoft and the FTC since the agency first challenged the merger in its in-house administrative court. The FTC alleged that the combination would hurt video gamers by giving Microsoft control over several popular franchises. The agency feared that Microsoft might withhold those titles from rivals such as Sony’s PlayStation or from nascent cloud-based streaming platforms.
US antitrust officials had argued that an injunction temporarily blocking the deal was necessary because allowing the merger to close amid ongoing litigation would have caused immediate harm to video gamers and other consumers. The FTC had sought an injunction preventing the deal from closing until the agency’s in-house court had reached a decision on the matter.
During a five-day hearing last month in federal court, Microsoft executives, including CEO Satya Nadella, testified that properties such as “Call of Duty” would not be restricted from competitors following the deal’s close. As a response to regulator scrutiny, Microsoft has also signed various multi-year licensing agreements with companies including Nvidia and Nintendo to ensure the availability of content for their platforms if the merger is approved.
The Court Decision
District Judge Jacqueline Scott Corley wrote in the 53-page partially redacted opinion that the US government had not shown it likely to succeed on its assertion that the combined firm would pull Call of Duty from Sony PlayStation, or that its ownership of Activision content would significantly reduce competition in the video game library subscription and cloud gaming markets.
“The FTC has not identified a single document that contradicts Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch),” the opinion said, despite agency lawyers’ access to nearly one million company documents and 30 depositions.
Corley outlined eight factors that bolstered Microsoft’s defense, including that Microsoft stands to make more money by making “Call of Duty” available on as many platforms as possible. The licensing agreements Microsoft has signed also showed that public scrutiny of the deal “has paid off,” further reducing the need for court intervention.
Microsoft’s Response
“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. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”
In a separate statement, Activision Blizzard CEO Bobby Kotick said the merger “will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
Conclusion
The court’s decision is a significant victory for Microsoft, which can now move forward with its plans to acquire Activision Blizzard. The acquisition will give Microsoft a significant foothold in the video game market and control over some of the world’s most popular franchises. The decision is also a setback for the FTC, which has been working to prevent the merger from going through. The FTC could potentially escalate the case and ask the US Court of Appeals for the Ninth Circuit for a stay of Corley’s order pending an appeal.
Frequently Asked Questions
What does Microsoft’s acquisition of Activision Blizzard mean for gamers?
Microsoft’s acquisition of Activision Blizzard means that it will have control over some of the world’s most popular video game franchises, including “Call of Duty,” “World of Warcraft,” and “Diablo.” The deal could give Microsoft an advantage over its competitors and potentially limit the availability of those titles on other platforms.
Why did the FTC challenge the Activision acquisition?
The FTC challenged the acquisition, alleging that it would harm competition in the video game market and give Microsoft control over several popular franchises. The agency feared that Microsoft might withhold those titles from rivals such as Sony’s PlayStation or from nascent cloud-based streaming platforms.
What was Microsoft’s defense against the FTC’s allegations?
During the testimony, Microsoft executives, including CEO Satya Nadella, stated that they would not impose restrictions on properties like “Call of Duty” from competitors once the deal is completed. Furthermore, Microsoft signed multi-year licensing agreements with companies like Nvidia and Nintendo to ensure content availability on their platforms if the merger receives approval.
What happens next in the legal battle over the Activision acquisition?
The court’s decision is a significant victory for Microsoft, which can now move forward with its plans to acquire Activision Blizzard. The FTC could potentially escalate the case and ask the US Court of Appeals for the Ninth Circuit for a stay of Corley’s order pending an appeal.
First Reported on: CNN
