Judge Jacqueline Scott Corley has made a decision in the recent Microsoft vs FTC trial, ruling in favor of Microsoft and denying the FTC’s preliminary injunction request.
“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 ten 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.”
In a statement issued by FTC, their spokesperson Douglas Farrar said: “We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”
Bobby Kotick says his piece about the Microsoft vs FTC merger ruling
Activision Blizzard boss Bobby Kotick also issued a statement following the ruling: “Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.”
The decision allows Microsoft to proceed with the buyout before the July 18 deadline, but the company still faces regulatory challenges from the UK’s Competition Markets Authority (CMA). Microsoft has appealed the CMA’s earlier decision, and a hearing will be from July 28 to August 4.
Brad Smith of Microsoft stated that they are now considering potential modifications to the transaction to address the CMA’s concerns. As a result, Microsoft, Activision, and the CMA have agreed to suspend the litigation in the UK. This means that Microsoft’s appeal in the UK will be on hold as the three parties work towards a satisfactory transaction restructuring.
“After today’s court decision in the U.S., our focus now turns back to the UK,” Smith said. “While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA. In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”
Convincing CMA will be Microsoft’s next step for the merger to go through
The Competition Markets Authority (CMA) told the gaming news outlet IGN: “We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns set out in our final report. In order to be able to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of litigation in the UK would be in the public interest and all parties have made a joint submission to the Competition Appeal Tribunal to this effect.”
The CMA is concerned about the buyout’s implications for cloud gaming, saying: “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.”
Both parties engaged in a court battle last month, with the trial spanning four days and uncovering various revelations. Court documents disclosed a list of game developers that Xbox had considered acquiring to address content gaps. PlayStation CEO Jim Ryan admitted that he did not view the Xbox console exclusive status of Starfield as “anti-competitive.” Microsoft CEO Satya Nadella expressed his lack of enthusiasm for console exclusives.
The Microsoft vs FTC trial was a farce to some, as the FTC failed to conjure any factual evidence to support their case. The FTC committee was seemingly bent on protecting Sony’s interest rather than the consumer’s which the Judge called them upon it several times during the trials.