Top 5 This Week

Related Posts

Microsoft Wins Court Battle Against FTC Over Activision Blizzard Acquisition [Update: FTC Appealing]

Federal Judge Jacqueline Scott Corley has ruled against the Federal Trade Commission’s attempt to block Microsoft from closing its $69 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.

The Open World Racing Game That's Been Gone For A Decade Is Coming Back

Share SubtitlesOffEnglishShare this VideoFacebookTwitterEmailRedditLinkview videoThe Open World Racing Game That’s Been Gone For A Decade Is Coming Back

Judge Corley writes in her 53-page decision:

On just about every point, the Judge found the FTC’s arguments wanting. In particular, she was unmoved by Harvard economics professor Robin Lee’s analysis that Microsoft would have a financial incentive to make Call of Duty and Xbox console exclusive, and wrote that it failed to take into account plans for the franchise to remain on PC, come to Switch, and be accessible through cloud gaming.

“Before the merger, a consumer wanting to play a Call of Duty console game had to buy a PlayStation or an Xbox,” Judge Corley wrote. “After the merger, consumers can utilize the cloud to play on the device of choice, including, it is intended, on the Nintendo Switch. Perhaps bad for Sony. But good for Call of Duty gamers and future gamers.”

What happens to the Microsoft Activision deal now?

The FTC can try to appeal the ruling, and still has its own anti-trust lawsuit in the works, but both appear unlikely at this juncture to derail the deal. The last obstacle in Microsoft’s way, the Competition and Markets Authority (CMA) blocking the deal in the UK, also appears to be disappearing. Microsoft President Brad Smith tweeted that it is currently set to negotiate with the CMA on final remedies to win back approval for the deal.

“We’re grateful to the court for swiftly deciding in our favor,” 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.” Activision’s stock price is now the highest it’s been since the deal was first announced back in January 2022, approaching the planned sale price of $95 a share.

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.

Ultimately, Judge Corley wrote that those examples were unpersuasive because they weren’t live service, multiplatform multiplayer games like Call of Duty. She instead cited Minecraft’s continued non-exclusive availability as a counterexample. “While the FTC argues Microsoft’s ‘past conduct following similar transactions also demonstrates its likely anticompetitive nature,’ presumably referring to the ZeniMax acquisition, this ignores the Mojang/Minecraft acquisition,” she wrote.

Update 7/11/23 12:13 p.m. ET: Added more information about the court’s ruling and the CMA re-starting negotiations with Microsoft.

Popular Articles