A California judge has ruled in favour of Microsoft, allowing the tech giant to proceed with its acquisition of gaming company Activision Blizzard. The ruling comes after five days of intense testimony and denies the Federal Trade Commission's (FTC) request for a preliminary injunction. While the FTC still has an ongoing antitrust case against Microsoft, Judge Jacqueline Scott Corley found that the FTC had not demonstrated a likelihood of prevailing on its claim that the merger would substantially lessen competition.
Judge Corley based her decision on Microsoft's commitments to maintaining Call of Duty on PlayStation for 10 years, ensuring parity with Xbox, and extending the game to Nintendo Switch. She also took into account the agreements Microsoft made to bring Activision's content to various cloud gaming services. The court ruling acknowledges the FTC's concerns regarding Microsoft's cloud agreements but ultimately determines that they do not outweigh the benefits to consumer access.
Microsoft President Brad Smith expressed gratitude for the court's decision and hoped for timely resolutions in other jurisdictions. Xbox Head Phil Spencer, who served as a key witness in the trial, also welcomed the ruling, highlighting the evidence presented that supports the positive impact of the Activision Blizzard deal on the industry. Activision Blizzard CEO Bobby Kotick stated that the merger would benefit consumers and workers, enabling healthy competition in the rapidly growing gaming industry.
The FTC, however, expressed disappointment with the outcome and stated that it would announce its next steps in the coming days. The commission believes that the merger poses a threat to open competition in cloud gaming, subscription services, and consoles. It remains to be seen whether the FTC will appeal the court's decision.
The ruling allows Microsoft to proceed with its Activision Blizzard deal before the July 18th deadline, provided that the company is willing to close around the UK or negotiate a remedy with the Competition and Markets Authority (CMA). Microsoft is currently appealing the CMA's decision to block the acquisition, with a hearing scheduled for July 28th.
Legal experts specializing in competition law suggest that the FTC would face challenges in any appeal of the court's order. They note that Judge Corley found no evidence contradicting Microsoft's commitment to not make "Call of Duty" exclusive to Xbox, which weakens the FTC's case. Appeals courts generally defer to judges on factual records, and the facts, in this case, appear to favour Microsoft and Activision.
While the legal battle continues, the ruling signifies a significant step forward for Microsoft in its pursuit of the Activision Blizzard acquisition. The outcome will have implications for the gaming industry and competition in the cloud gaming and console markets.
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