With this decision, Microsoft can move towards closing the $68.7 billion deal in the US before the July 18 deadline.
Judge Jacqueline Scott Corley has therefore denied the FTC’s request for an injunction, so the US Federal Trade Commission cannot block Microsoft’s acquisition of Activision Blizzard King with this move. Therefore, Redmond can either close the deal, ignoring the UK or settle with the country’s Competition and Markets Authority (CMA), which refused to approve the transaction in April. Microsoft can try the case in court on July 28 after an appeal. However, that’s after the July 18 deadline, so Redmond would have to pay Activision Blizzard King three billion dollars as a termination fee.
“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,” the judge wrote.
Xbox CEO Phil Spencer figuratively broke out the champagne in several tweets about the decision: “We’re grateful to the court for swiftly deciding in our favor. 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. Since we first announced this deal, our commitment to bringing more games to more people on more devices has only grown. We’ve signed multiple agreements to make Activision Blizzard’s games, Xbox first-party games, and Game Pass available to more players than they are today. We know that players worldwide have been watching this case closely, and I’m proud of our efforts to expand player access and choice throughout this journey.”
It’s unknown whether the FTC will appeal, but the other obstructionist authority, the CMA, is slowly becoming more inclined to agree. Microsoft will have to go to court again in August because of the FTC, but most of the commission’s points have since been swept off the table, so the Redmond tech giant’s case is pretty much closed there. The CMA is willing to pause the court proceedings, and Microsoft could be given a chance to make further changes to the deal that would allow it to be accepted in the UK.
“We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our Final Report. To be able to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest, and all parties have made a joint submission to the Competition Appeal Tribunal to this effect,” writes the CMA.
Microsoft president Brad Smith also responded with a statement: “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 to address those concerns in an acceptable way to the CMA.” There was one other sentence, but it was the same as the CMA’s, so we skipped that.
So it could be decided in a week whether Microsoft can take over the Call of Duty publisher…
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