Wednesday, July 12th 2023
Microsoft Closer to Finalizing Activision Blizzard Merger - FTC Injunction Request Rejected by US Judge
Microsoft is closing in on its proposed $69 billion acquisition of Activision Blizzard—the company is celebrating another victory, following the conclusion of a crucial court case against the US Federal Trade Commission (FTC). Both parties were recently engaged in five days of arguments and deliberation—yesterday Judge Jacqueline Scott Corley's final ruling stated: 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."
The lady justice continued: "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."Microsoft President and Vice Chair, Brad Smith, released his own statement regarding the victory: "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. As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns."
Xbox boss, Phil Spencer was also in a jubilant mood: "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."
Microsoft is clear to complete the deal ahead of a July 18th deadline, but proceedings will be complicated by Britain's blocking of the merger. The UK Competition and Markets Authority (CMA) is now the final hurdle, and all involved seem to be open to further discussions. Smith issued a second statement that outlined renewed negotiation efforts: "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."
Spencer is also ready to hammer out terms with the UK anti-trust body—in a memo sent to Microsoft employees he wrote: "After today's decision, we are turning our focus to the UK. As you may be aware, a few months ago, the UK Competition and Markets Authority recommended that the deal be prohibited. We disagree with the CMA's concerns and have challenged its decision on appeal. At the same time, however, we are considering how the transaction might be modified to address the CMA's concerns in a way that is acceptable to the CMA. In order to prioritize work on potential options, Microsoft and Activision have agreed with the CMA that pausing the appeal now would be in the public interest, and both we and the CMA have made a joint submission to the Competition Appeal Tribunal to this effect."
Sources:
The Verge Article #1, BBC News, The Verge Article #2
The lady justice continued: "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."Microsoft President and Vice Chair, Brad Smith, released his own statement regarding the victory: "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. As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns."
Xbox boss, Phil Spencer was also in a jubilant mood: "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."
Microsoft is clear to complete the deal ahead of a July 18th deadline, but proceedings will be complicated by Britain's blocking of the merger. The UK Competition and Markets Authority (CMA) is now the final hurdle, and all involved seem to be open to further discussions. Smith issued a second statement that outlined renewed negotiation efforts: "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."
Spencer is also ready to hammer out terms with the UK anti-trust body—in a memo sent to Microsoft employees he wrote: "After today's decision, we are turning our focus to the UK. As you may be aware, a few months ago, the UK Competition and Markets Authority recommended that the deal be prohibited. We disagree with the CMA's concerns and have challenged its decision on appeal. At the same time, however, we are considering how the transaction might be modified to address the CMA's concerns in a way that is acceptable to the CMA. In order to prioritize work on potential options, Microsoft and Activision have agreed with the CMA that pausing the appeal now would be in the public interest, and both we and the CMA have made a joint submission to the Competition Appeal Tribunal to this effect."
15 Comments on Microsoft Closer to Finalizing Activision Blizzard Merger - FTC Injunction Request Rejected by US Judge
I own every Blizzard game up to Diablo 4 and the latest WoW expansion, and I'm surprised Diablo 4 sold as well as it did. Blizzard PC gaming died long ago for me; the games are too corporate cookie cutter now. The two legacy PC gaming juggernauts, Valve and Blizard, are now limited to just 1 - Valve.
I support American tech giants; however, I really wish the FTC would have had a competent director at the helm rather than the current young director whose mindset is blocking big tech just because they shouldn't be so big without providing and preparing for a good trial.
Mergers/acquisitions are the only significant way to grow.
They all do it: Apple, Facebook, Google, Microsoft, Amazon etc
Rather companies shouldn’t be allowed to push the market in a direction by buying up a large majority of the market because they have financials which allow it.
EDIT: That’s why I initially said that the FTC director is taking horrible direction. The focus shouldn’t be on cloud gaming dominance. There is dominance because there are essentially 0 players other than Microsoft that offer the service in the cloud that Xbox Gamepass Cloud does. Nvidia is different because they are streaming games that you already own. What’s anticompetitive is buying up the market to make gamepass appealing by forcing developers into a service they weren’t interested in. That in turn gives the consumer little option when weighing the pros and cons of the service because all the games they want are there, only because they MS owns the majority of the market through anticompetitive M&A.
Essentially, it becomes dumb to not sign up for a subscription like gamepass because a large majority of developers will now be forced on the service. Microsoft could then say well yes, Call of Duty or whatever game is not exclusive to Xbox, but it is exclusive to streaming services, ie, our service gamepass and we own all the content out there. It’s anticompetitive.
What stops MS from spending another $30 billion to buy up EA? Shareholders? Please MS market cap has not moved since news that the buyout can continue, but Activision shot up.
How could someone so incompetent be at the head of the FTC?
IF you really want to see how inept she is watch the video of her being grilled by congress yesterday the fact that much older house members have a better grasp of the market than she does is comical.