FTC’s Latest Attempt to Pause Deal Denied as Microsoft Weighs Potential CMA Solution
Not only has the Federal Trade Commission’s (FTC) request to temporarily stall Microsoft’s $68.7 billion deal to acquire Activision Blizzard pending appeal, but Microsoft and Activision Blizzard are reportedly considering the sale some of their UK cloud gaming rights to appease the UK Competition and Markets Authority (CMA).
As Reuters and Bloomberg report, Judge Jacqueline Scott Corley, the same judge who denied the FTC’s request for an injunction against the massive deal, also denied the FTC’s request to stop the deal pending the Ninth Circuit Court’s decision has.
“The FTC is asking this court to order the merger in question pending a decision on the FTC’s appeal to the Ninth Circuit Court of Appeals. The application is denied,” Corley wrote.
Corley’s decision to deny this application and the FTC’s injunction was due to many factors, one of the main reasons being Call of Duty.
“Microsoft’s acquisition of Activision has been described as the largest in technology history,” Judge Corley said in the ruling. “It deserves close scrutiny. That scrutiny paid off: Microsoft has committed in writing, publicly, and in court to keep Call of Duty on PlayStation on par with Xbox for 10 years. It struck an agreement with Nintendo to bring Call of Duty to the Switch. Also, multiple deals were struck to bring Activision’s content to multiple cloud gaming services for the first time.
“The jurisdiction of this court in this case is limited. It is to determine whether, notwithstanding these current circumstances, the merger should be halted — perhaps even terminated — pending FTC administrative action.
“For the reasons set forth, the Court concludes that the FTC has not shown any likelihood that it will prevail in its contention that this particular vertical merger could significantly reduce competition in this specific industry. To the contrary, the evidence at hand suggests consumers are having more access to Call of Duty and other Activision content. The request for an injunction is therefore DENIED.”
Microsoft’s and Activision Blizzard’s attempt to appease the CMA is reportedly in the cloud
As for the CMA, Microsoft and Activision Blizzard are reportedly considering giving up part of their cloud gaming business in the UK to increase regulators’ willingness to pull through this mega deal.
Sources have indicated that the companies could sell their “cloud-based gaming market rights in the UK to a telecom, gaming or internet-based computing company” or a “private equity firm”.
The CMA vetoed the deal back in April 2023, but said Microsoft and Activision Blizzard would like to restructure the terms of the proposed acquisition. Unfortunately, that would require an entirely new investigation that could take some time to complete.
Referring to the original proposal, the CMA said: “The deal would change the future of the fast-growing cloud gaming market and result in less innovation and less choice for UK gamers in 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 Microsoft and Activision Blizzard to shut down. However, some analysts believe Microsoft has brokered a deal with CMA to finalize the deal before the dispute is resolved.
Speaking of the deadline, if the deal doesn’t close by July 18, Xbox would have to pay Activision Blizzard $3 billion and the two companies could renegotiate the terms of their merger.
IGN has spoken to a handful of analysts who believe the deal is yet to go through, but it’s hard to predict with 100% certainty what will happen as we fast approach July 18th.
For more information, see our full court roundup on the Microsoft, Activision Blizzard and FTC lawsuit and why the FTC chief was recently accused of wasting taxpayers’ money appealing the Xbox ruling.
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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and further Pull out.