Another chapter in the Microsoft Activision Blizzard $68.7 billion acquisition saga has come to a close. After weeks of arguments in Microsoft’s court case against the FTC (Federal Trade Commission), a result has been delivered by Judge Corely, who rules in favour of the tech company and denies the regulator’s request for a preliminary injunction, as first reported by The Verge.
“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 ten years on parity with Xbox. It agreed 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,” California Judge Jaqueline Scott Corley wrote in a 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.”
It seems that Xbox’s commitment to keeping Call of Duty on PlayStation for the next ten years and to bring the franchise back to Nintendo as well as many other cloud services, played a part in Microsoft’s successful court case win against the FTC; even agreeing that the Nintendo Switch is a competitor to PlayStation and Xbox. As noted by the judge, another factor was a lack of evidence on the FTC’s part. Microsoft has demonstrated a motivation to get Call of Duty in the hands of as many players as possible, even beyond Activision Blizzard’s current commitments.
Microsoft should be commended her a bit; as you can see, the long-term play for these platform deals wasn’t very well orchestrated, which all led to the finality of the court case, which saw a lot of dirty laundry aired out in the fallout on the court’s theatrical stage. Some of those stories include Jim Ryan revealing in pre-recorded video disposition that publishers dislike Game Pass while calling it “value destructive,” documents revealing that the PS5 Slim is launching later this year at $399, and not so shockingly that Xbox at one point wanted to buy Bungie and Sega.
“Our merger will benefit consumers and workers,” said Bobby Kotick, Activision Blizzard’s CEO. “It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
Our statement on today's decision: pic.twitter.com/jRDD8PhBeT
— Brad Smith (@BradSmi) July 11, 2023
Now gamers paying attention to this ongoing almost 18-month acquisition story may sigh in relief. Still, it isn’t over just yet, as the FTC has until the end of July 14th to appeal the decision of this court case. It remains to be seen whether the regulator will go in that direction. In addition, following today’s decision, Microsoft and the regulator are set to go at it again in an evidentiary hearing held by the FTC which is set to kick off on August 2nd with an internal FTV judge already attached to the case.
In response to the ruling, FTC spokesperson Douglas Farrar said, “We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”
