US District Court Denies FTC Request for Injunction in Microsoft-Activision Blizzard Merger

In a recent development, a US district court has denied the Federal Trade Commission‘s (FTC) request for a preliminary injunction to halt Microsoft‘s acquisition of gaming giant Activision Blizzard. The court’s decision follows the FTC’s attempt to block the $69 billion merger, claiming that it would significantly reduce competition in the gaming industry.

The FTC filed a restraining order on June 12th, seeking to halt the deal and citing concerns over Microsoft’s intentions to proceed with the merger while the commission was conducting an ongoing investigation. However, the court ruled that the FTC was unlikely to succeed in proving that competition would be substantially diminished if the merger were to go ahead.

Had the preliminary injunction been granted, the merger, which holds the title of the largest in gaming history, would have faced further delays or even cancellation. The United States District Court for the Northern District of California determined that there was no immediate need for such measures.

In her opinion on the case, Judge Jacqueline Scott Corley stated, “After considering the parties’ voluminous pre- and post-hearing writing submissions and having held a five-day evidentiary hearing, the court DENIES the motion for preliminary injunction.” The judge further noted that the FTC failed to demonstrate the likelihood of Microsoft withdrawing the popular game Call of Duty from Sony PlayStation or that the merger would substantially reduce competition in the video game library subscription and cloud gaming markets.

Following the court’s decision, Microsoft President Brad Smith expressed gratitude for the prompt and comprehensive ruling. Smith stated, “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.” He also emphasised Microsoft’s commitment to addressing regulatory concerns by working collaboratively and creatively.

However, despite the court’s ruling, the Microsoft-Activision Blizzard merger still faces obstacles in the United Kingdom. The Competition and Markets Authority (CMA) has blocked the deal, prompting both companies to appeal the decision. The trial for the appeal is set to commence on July 28th. To proceed with the merger in the UK, Microsoft would need to negotiate an agreement with the CMA or find alternative solutions to address the regulatory concerns raised.

In response to the CMA’s blockage, Microsoft’s Brad Smith conveyed that the company is actively considering modifications to the transaction to address the CMA’s concerns. This indicates a willingness on Microsoft’s part to explore alternative options and find common ground.

Microsoft initially announced its intent to acquire game publisher and esports heavyweight Activision Blizzard for $68.7 billion in January 2022. The proposed merger would solidify Microsoft’s position as the third largest gaming company and grant it ownership of Activision Blizzard’s struggling franchised esports leagues, namely the Overwatch League and Call of Duty League.

As the legal battles continue on multiple fronts, the fate of the Microsoft-Activision Blizzard merger remains uncertain. Stakeholders and gaming enthusiasts eagerly await further developments to see whether this monumental deal will ultimately come to fruition or face further challenges in the ever-evolving gaming industry.