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Microsoft-Activision deal back on track after US court win
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Microsoft-Activision deal back on track after US court win
by AFP Staff Writers
Washington (AFP) July 11, 2023

A US federal judge on Tuesday resurrected Microsoft's $69 billion buyout of video gaming giant Activision Blizzard by refusing to allow a temporary suspension of the long delayed deal.

The US Federal Trade Commission, the Washington-based antitrust enforcer, requested that the blockbuster transaction be halted pending an investigation on competition concerns.

But Judge Jacqueline Scott Corley said "the FTC has not shown a likelihood it will prevail on its claim," clearing the way for the deal to go through in the United States.

The decision handed a major victory to Microsoft and allowed it to close its purchase of Activision, the maker of "Call of Duty" and "Candy Crush," as planned on July 18.

Xbox-owner Microsoft launched a bid for Activision Blizzard eighteen months ago, seeking to establish the world's third biggest gaming firm by revenue after China's Tencent and Japan's PlayStation maker Sony.

While the European Union has greenlit the deal, Microsoft still needs to overcome a veto from the Competition and Markets Authority (CMA) in Britain.

"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," said Microsoft President Brad Smith.

"As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns," he added.

At the heart of concerns for regulators was the prospect that Microsoft would deny rivals access to wildly popular games, most notably the blockbuster "Call of Duty," and make them available only on Xbox consoles.

Another worry, especially for the UK regulator, was the fate of cloud gaming, a market that remains largely underdeveloped but would be of great interest to Microsoft, a cloud computing leader along with Amazon's AWS.

- 'Grateful' -

Microsoft was set for an appeal hearing in London later this month, but the company on Tuesday said it would consider further ways to satisfy the CMA.

"We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns," a CMA spokesperson said.

Sources told CNBC that Microsoft was looking at a small divesture of one of its businesses to satisfy the UK regulator.

The FTC can appeal the ruling or could also continue to pursue its case, though the judge's position weakened the legal foundations of that prospect considerably.

An FTC spokesman said the agency was disappointed by the decision and would announce its next steps in the coming days.

The FTC in December sued to block the transaction with Activision Blizzard over concerns that it would stifle competition.

But Judge Corley said the remedies offered by Microsoft to assuage worries about the deal were effective to provide fair competition with archrivals Sony and Nintendo as well as other computer cloud operators of video games.

Instead of showing harm to competition, "to the contrary, the record evidence points to more consumer access to 'Call of Duty' and other Activision content," she said.

The ruling dealt another defeat to the FTC, which is led by Lina Khan, an antitrust academic who had been an advocate of breaking up the biggest tech firms before she was nominated by President Joe Biden to the job in 2021.

In the same California court, Khan lost an attempt to stop Meta, Facebook's parent company, from acquiring Within Unlimited, a fitness app startup.

arp/caw/dw

Meta

Tencent

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