UPDATE: 7-14-23: The FTC’s further appeal has been denied by the Ninth Circuit Court earlier today, meaning that apart from the CMA, which should wrap up either on Monday or Tuesday, Microsoft is set to acquire Activision Blizzard.
UPDATE: The FTC has filed an appeal against the ruling by Judge Corley to deny the injunction. We will update this story as it continues. Until then, check out the events that have led us here.
With a deal as big as Microsoft's proposed acquisition of Activision Blizzard King, it was always going to be an uphill battle for the console publisher. While most of the world has seen fit to accept the deal, and all terms offered by Microsoft, the UK and the US have been largely opposed to said deal.
Over the past few weeks, the FTC had filed an injunction towards the deal, looking to stand firm and deny Microsoft's staggering $69 billion dollar effort from going forward. And while the court case has detailed some incredible facts about all parties involved, including Jim Ryan's efforts towards blocking this deal, the FTC has lost this round as Judge Corley has sided with Microsoft, denying the FTC's preliminary injunction request.
Corley said the following:
"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 10 years on parity with Xbox. It made an agreement 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.
"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."
FTC spokesperson Douglas Farrar has also made a statement to IGN:
"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.”
Elsewhere, Activision CEO Bobby Kotick issued his own statement on the victory today:
"Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
Microsoft president Brad Smith and Xbox Boss Phil Spencer both took to social media, issuing out their own personal statements.
Phil Spencer's statement was a multi-tweet thread, as follows:
"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 all available to more players than they are today.
We know that players around the world have been watching this case closely and I’m proud of our efforts to expand player access and choice throughout this journey.”
With a week remaining for the deal to go through by the July 18th deadline, providing it is not extended, Microsoft still has a lot of ground to cover in respect to having a universal approval, with a few countries left undecided, and the CMA still largely opposed to the deal. The hearing for the CMA and Microsoft is set to begin on July 28th, concluding on August 4th.
According to IGN, Microsoft's Brad Smith has stated they are now considering how the transaction may be modified in order to pass through the CMA. As a result of the victory today, Microsoft, Activision, and the CMA have mutually agreed to a pause in the litigation in the UK. This pause will allow each party to detail deeper into acceptable terms for the deal to go through, given the CMA is the only active party left to stop this deal.
Brad Smith detailed further in the same IGN statement:
"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. 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."
The CMA also stated:
"(We are) 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.
The deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come."
While this deal is far from done, it certainly has a strong indication that Microsoft is willing to do what it takes to see it close. And with one huge hurdle now apparently cleared, it certainly looks like things are going Microsoft's way.