Global: U.S. Appeals Court Denies FTC’s Request to Halt Microsoft’s Acquisition of Activision Blizzard

A U.S. appeals court has rejected the Federal Trade Commission’s (FTC) plea to pause Microsoft’s $69 billion acquisition of Activision Blizzard, the maker of “Call of Duty.” The court’s decision removes one of the few remaining obstacles for Microsoft to finalize the deal and expand its presence in the gaming industry.

The FTC had also sought a similar stay from Judge Jacqueline Scott Corley of the U.S. District Court in northern California, but her request was turned down on Thursday. The FTC has not provided immediate comment on the matter.

Expressing appreciation for the Ninth Circuit’s response, Microsoft President Brad Smith stated that the denial of the FTC’s motion brings them closer to completing the global regulatory reviews and finalizing the deal.

The acquisition, the largest in the history of the video game industry, still requires approval in Britain. With the latest appeal rejection, the FTC may choose to discontinue its fight, as it has done in similar situations in the past. In February, the FTC dropped its challenge against Meta Platforms’ purchase of virtual reality content maker Within Unlimited after losing in federal court.

The merger agreement between Microsoft and Activision is set to expire on July 18. If no extension is negotiated, either party will be free to terminate the deal.

In the UK, the Competition and Markets Authority has expressed concerns about the impact on competition in cloud gaming and opposes the transaction. On Friday, it received a new proposal from Microsoft, which it described as “detailed and complex,” and extended the deadline for a final ruling to August 29, with the aim to rule as soon as possible.

In the United States, the FTC argued that the deal would harm consumers, whether they played games on consoles or had subscriptions, due to Microsoft potentially excluding competitors like Sony Group. Microsoft responded by offering 10-year licenses to rivals.

However, Judge Corley ruled on Tuesday that the deal complied with antitrust laws and rejected the FTC’s request for a preliminary injunction, allowing the deal to proceed. The FTC appealed the ruling to the Ninth Circuit Court of Appeals, which issued its decision on Friday.

The FTC emphasized in a filing to the appeals court that the case went beyond a single video game and console hardware, as it was about the future of the gaming industry and the potential consolidation of subscription and cloud markets.

Microsoft has also entered into an agreement to grant rival Nintendo access to Activision’s “Call of Duty” upon the deal’s completion. The company argues that such agreements demonstrate its intention to not monopolize games for its Xbox platform and subscription service.