Microsoftâs planned $68.7 billion purchase of Call of Duty and World of Warcraft publisher Activision Blizzard can go forward in the U.S., a federal judge ruled on Tuesday. Judge Jacqueline Scott Corley denied the Federal Trade Commissionâs request to stop the deal before its deadline for completion on July 18.
âThe FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation,â Corley wrote in her order, âor that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.â
She continued:
Microsoftâs 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 Activisionâs content to several cloud gaming services. This Courtâs responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted â perhaps even terminated â 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.
The FTC can appeal this ruling; it has until July 14 at 11:59 p.m. PDT to make that decision.
Corleyâs ruling came after a weeklong hearing at the end of June, during which federal regulators argued that Microsoft would gain anticompetitive power by acquiring a publisher as large as Activision Blizzard. Government lawyers said Microsoft was likely to limit PlayStation usersâ access to Activision Blizzard titles like Call of Duty, either by making them exclusive to Microsoftâs Xbox and PC platforms, or publishing diminished versions to Sonyâs.
âOur merger will benefit consumers and workers,â Activision Blizzard chief executive Bobby Kotick said on Tuesday. âIt will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.â
Two other major regulatory bodies in the United Kingdom and European Union have decided too; the U.K.âs Competition and Markets Authority moved to block the deal in April; the European Union approved it in May. Microsoft appealed the CMA decision shortly after it was announced, and that process is expected to take a while. Elsewhere, the deal has been approved by the majority of foreign markets, small and large.
The win for Microsoft means its deal could be completed without Microsoft having to pay a $3 billion termination fee if the deal was scuttled, as long as the companies skirt the U.K. or reach an agreement with the Competition and Markets Authority. Closing the deal without approval in the U.K. is a complicated option, however, and itâs possible that Microsoft and Activision will choose to extend the deal deadline until they have worked out the issues. Microsoftâs attorneys had said that a ruling in favor of the FTC â which was trying to have the deal stopped until its own administrative hearing could be resolved â would scrap the acquisition outright, regardless of what the FTCâs own hearing determined.
âWeâre grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue towards a timely resolution,â Brad Smith, Microsoftâs president, said in a statement Tuesday. âAs weâve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.â