The likelihood of Microsoft’s acquisition of major games publisher Activision Blizzard has increased significantly after a US judge dismissed a request from regulators to block the deal. Microsoft’s merger with Activision, valued at $69 billion, would be the largest deal in gaming industry history. The ruling in favor of Microsoft comes after the European Union approved the merger, while a bid to block it in the UK is currently under appeal. The decision paves the way for Microsoft to proceed with the acquisition, although the Federal Trade Commission (FTC) can still appeal the ruling. Microsoft and the UK’s Competition and Markets Authority (CMA) have agreed to put litigation on hold while addressing concerns related to the cloud gaming market.
Main Body:
A US judge has rejected regulators’ request to block Microsoft’s acquisition of Activision Blizzard, providing a significant boost to the chances of the deal going ahead. The merger between Microsoft and Activision, which would be the largest in gaming industry history, has faced scrutiny from regulators who argued that it would harm gamers and reduce competition by granting Microsoft the power to deny rivals access to Activision’s games.
Judge Jacqueline Scott Corley stated in her decision that the Federal Trade Commission (FTC) had not demonstrated a strong case in asserting that the merged company would likely withdraw the Call of Duty franchise from Sony PlayStation or substantially reduce competition in the video game library subscription and cloud gaming markets. This ruling, delivered after a week-long hearing in San Francisco, indicates a strong indication that Microsoft’s purchase of Activision will proceed as planned.
The deal has already received approval from the European Union, while the bid to block the merger in the UK is currently under appeal.
Microsoft’s President, Brad Smith, expressed gratitude for the swift decision and mentioned the company’s intention to focus on addressing concerns raised in the UK. Microsoft and the UK’s Competition and Markets Authority have agreed to put litigation on hold while finding ways to address concerns related to the cloud gaming market.
The developments surrounding the merger appear to be a significant win for Microsoft, which is striving to compete with market leaders PlayStation and Nintendo by heavily investing in gaming content to attract players to its platforms, including the Xbox console.
Activision Blizzard, known for major titles such as Call of Duty, World of Warcraft, Diablo, and Overwatch, as well as owning King, the mobile games developer responsible for Candy Crush, holds significant influence in the gaming industry.
The regulators’ arguments particularly focused on the fate of the Call of Duty franchise. PlayStation boss Jim Ryan contended that Microsoft would likely restrict access to the series for PlayStation users or provide them with a degraded version. However, Microsoft countered this claim by stating that it had offered Sony a 10-year licensing agreement for the game and that it would be financially nonsensical to restrict access to such a massive following.
Bobby Kotick, the CEO of Activision Blizzard, expressed optimism after the ruling, stating that the merger would benefit consumers and workers, promoting competition in the rapidly growing industry. He also emphasized readiness to work with UK regulators to address any remaining concerns and facilitate a quick closure of the merger.
Although the US ruling is a significant step forward, the FTC still has the option to appeal. The FTC has also challenged the merger separately in an administrative court process.
The FTC spokesperson, Douglas Farrar, expressed disappointment in the ruling, highlighting the perceived threat the merger poses to competition in cloud gaming, subscription services, and consoles. The FTC intends to announce its next steps in the coming days to continue its fight to preserve competition and protect consumers.
Conclusion:
The US judge’s rejection of regulators’ request to block Microsoft’s acquisition of Activision Blizzard has significantly increased the likelihood of the deal proceeding as planned. The ruling represents a major win for Microsoft, positioning the company to compete with industry leaders PlayStation and Nintendo. However, the FTC can still appeal the decision, and the process is ongoing. Meanwhile, Microsoft and the UK’s Competition and Markets Authority have agreed to pause litigation to address concerns related to the cloud gaming market. The outcome of the merger will have a substantial impact on the gaming industry and the competitive landscape of gaming platforms.
