Microsoft has been given the right to complete its $75 billion acquisition of Call of Duty game maker Activision Blizzard after the Federal Trade Commission (FTC) tried to block the deal.
The FTC had hoped to scrap the proposed deal – which would make Microsoft the third-biggest gaming company – because it feared it would stifle competition and deny consumers access to games.
But Judge Jacqueline Scott Corley dismissed the claims in a ruling released Thursday, stating, “To the contrary, the available evidence suggests consumers are having more access to Call of Duty and other Activision content.”
Microsoft, maker of the Xbox consoles, has written a commitment to make Call of Duty – the jewel in Activision’s crown – available on PlayStation for the next ten years.
Activision – which also makes Crash Bandicoot, World of Warcraft, and Candy Crush – is now scheduled to go on sale in a week, July 18, as planned. The stock price shot up 10 percent on the news this afternoon.
Microsoft CEO Satya Nadella (pictured) arrives in San Francisco June 28 for a trial in federal court where he testified that Microsoft will retain access to Call of Duty on PlayStation
Bobby Kotick (pictured in court in June), Activision’s chief executive officer, said in a statement that the merger would “encourage competition and not allow established market leaders to continue to dominate.”
On Tuesday, when the markets opened, Activision shares were trading at around $83 — and have been for about a month — but by 3 p.m. the price was up almost 10 percent to over $90 a share
The FTC’s move was part of a broader effort by the Biden administration to block large mergers — a key focus of the president’s economic policies.
During the hearing, District Judge Jacqueline Scott Corley, a Biden nominee, raised concerns about the potential harm if Microsoft hypothetically limited Call of Duty to Microsoft’s Xbox gaming devices.
A similar style of first-person shooter to Call of Duty, the popular Halo video game series was developed by Bungie, purchased by Microsoft in 2000, and never released on Sony’s PlayStation devices.
“Microsoft’s acquisition of Activision has been described as the largest in technology history. “It deserves close scrutiny,” Judge Corley wrote in her July 11 ruling denying an injunction.
“That scrutiny has 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,” she added.
She also pointed out that a similar commitment was made with Nintendo to bring Call of Duty to its device, the Nintendo Switch.
News of the verdict sent Activision’s stock price skyrocketing. On Tuesday, when the markets opened, the share price was around $83 — and had been for about a month — but by 3 p.m. it was up nearly 10 percent to over $90 a share.
Activision CEO Bobby Kotick said in a statement that the merger would “encourage competition and not allow established market leaders to continue to dominate.”
In her July 11 ruling, the judge described the $75 billion as potentially one of the “biggest in tech history” and said it “deserves scrutiny.”
Microsoft’s takeover attempt was previously described by FTC Chairwoman Lina Khan as an unfair merger that will stifle competition across the video game sector. Pictured is Microsoft founder Bill Gates
“We are grateful to the San Francisco court for this quick and thorough ruling, and we hope other jurisdictions continue to work toward a timely resolution,” said Microsoft President Brad Smith.
“We have demonstrated time and again throughout this process that we are committed to working creatively and collaboratively to address regulatory concerns,” he added.
Jefferies analyst Andrew Uerkwitz told The Wall Street Journal, “We knew from the start that this deal would benefit gamers, give them more choice, and lower the barriers to accessing video games.”
“Microsoft expressed that meaning well.”
During last month’s trial, many prominent figures were called to the witness stand. Microsoft boss Satya Nadella said his company will make Activision games available on other platforms.
The Xbox owner launched a bid for Activision Blizzard early last year, aiming to become the world’s third-biggest gaming company by revenue, after Chinese company Tencent and Japanese PlayStation maker Sony.
While the European Union gave the deal the green light, Microsoft has yet to overcome a veto from the UK’s Competition and Markets Authority.
Those efforts looked more promising on Tuesday, however, when the CMA urged Microsoft to make suggestions on how to alleviate competition concerns.
The FTC unsuccessfully claimed that Microsoft, which owns the Xbox gaming system, as a major console maker and owner of Activision, had too much market power
The judge’s ruling marks a major setback for FTC Chairwoman Lina Khan (pictured), an antitrust lawyer who campaigned to break up the biggest tech companies before being nominated to the post by President Joe Biden in 2021
Microsoft was scheduled to have an appeals hearing in London later this month, but the company said it would consider other ways to comply with the CMA.
“We stand ready to review any proposals by Microsoft to restructure the transaction to address the concerns,” a CMA spokesman said.
In the US, too, the FTC could pursue its case, but the judge’s decision considerably weakens the legal basis for this prospect.
The ruling marked another defeat for the FTC, which is run by Lina Khan, an antitrust lawyer who campaigned to break up the biggest tech companies before being nominated to the post by President Joe Biden in 2021.
In the same California court, Khan lost an attempt to prevent Facebook’s parent company Meta from acquiring Within Unlimited, a fitness app startup.
Microsoft confirmed on Monday that it will cut more jobs in addition to the 10,000 employees it laid off in January.