Microsoft Activision

US Federal Judge denies FTC injunction request as Microsoft/Activision deal moves closer

The U.S. government can take the decision to the U.S. Court of Appeals for the 9th Circuit.

Microsoft Activision Blizzard Acquisition - Story 5 of 10

A federal judge in the U.S. has denied the Federal Trade Commission’s motion for a preliminary injunction to stop Microsoft’s acquisition of Activision.

The FTC can now bring the decision to the U.S. Court of Appeals for the 9th Circuit, and the two companies must find a way forward to resolve opposition from the Competition and Markets Authority in the United Kingdom

“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,” Judge Jacqueline Scott Corley wrote in her decision, published Tuesday.

“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.”

“We’re optimistic that today’s ruling signals a path to full regulatory approval elsewhere around the globe, and we stand ready to work with UK regulators to address any remaining concerns so our merger can quickly close,” Activision Blizzard CEO Bobby Kotick wrote in a memo to employees.

The decision comes after five days of court hearings to assess whether Microsoft would be able to complete the $68.7 billion Activision Blizzard acquisition it announced in 2022. The judge was deciding whether to grant the FTC’s request for an emergency injunction to prevent the deal from closing.

The FTC argued Microsoft has shown an interest in making some games exclusive, to prevent them from appearing on Sony’s PlayStation or Nintendo’s Switch, and that it might do so if the deal were to close. But Microsoft said the company would want to make Activision’s titles more widely available, rather than less, partly to grow from people subscribing to its Game Pass library of games.

Kotick and Microsoft CEO Satya Nadella both testified, as did executives from Alphabet, Nvidia and Sony.

“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, Microsoft’s president and vice chair, said in a statement.

“As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

Microsoft and Activision are also appealing a UK government decision to block the merger based on competition concerns in the cloud gaming market. A hearing on that appeal is set for July 28.

“After today’s court decision in the U.S., our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA,” Smith said in a statement.

“In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”