FTC’s Latest Attempt to Pause Deal Denied as Microsoft Weighs Potential CMA Solution
Not only has the request by the Federal Trade Commission (FTC) to temporarily halt Microsoft’s $68.7 billion deal to acquire Activision Blizzard pending its appeal decision been denied, but Microsoft and Activision Blizzard are also reportedly considering selling off some of their UK cloud-gaming rights to appease the UK’s Competition and Markets Authority (CMA).
As reported by Reuters and Bloomberg, Judge Jacqueline Scott Corley, the same judge who denied the FTC’s preliminary injunction request against the massive deal, also denied the FTC’s request to stop the deal until the Ninth Court of Appeals has made its decision.
“The FTC asks this Court to enjoin the merger at issue pending resolution of the FTC’s appeal to the Ninth Circuit Court of Appeals. The motion is denied,” Corley wrote.
Corley’s decision to deny this motion and the FTC’s preliminary injunction was due to many factors, with one of the main reasons being Call of Duty.
“Microsoft’s acquisition of Activision has been described as the largest in tech history,” Judge Corley said in the ruling. “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.”
Microsoft and Activision Blizzard’s Attempt to Appease the CMA Reportedly Lies in the Cloud
As for the CMA, Microsoft and Activision Blizzard are reportedly considering giving up some of their cloud-gaming business in the UK in an attempt make the regulators more willing to let this mega-deal go through.
Sources have noted the companies could sell off their “cloud-based market rights for games in the UK to a telecommunications, gaming or internet-based computing company” or a “private equity company.”
The CMA vetoed the deal back in April 2023, but it said Microsoft and Activision Blizzard are more than welcome to restructure the terms of the proposed acquisition. Unfortunately, this would require a whole new investigation that could take quite some time to complete.
In regard to the original proposal, the CMA said, “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.”
Microsoft appealed the decision and a court date was set for July 28, which would be after the July 18 deadline for the Microsoft and Activision Blizzard to close. However, some analysts believe Microsoft negotiated a deal with CMA to let the deal close before their quarrel is resolved.
Speaking of the deadline, if the deal is not completed by July 18, Xbox would need to pay $3 billion to Activision Blizzard and the two companies would be able to renegotiate the terms of their merger.
IGN spoke to a handful of analysts who believed the deal will still go through, but it’s hard to predict with 100% certainty what will happen as we race fast to July 18.
For more, check out our complete trial recap for the Microsoft, Activision Blizzard, and FTC court case and why the FTC boss was recently accused of wasting taxpayer money with the Xbox verdict appeal.
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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and on Twitch.
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