US Judge rejects FTC’s injunction request against Microsoft’s Activision Blizzard deal

The FTC's case against Microsoft's Activision Blizzard acquisition finally entered federal court in recent weeks. While the UK's CMA wanted to block the deal on cloud gaming concerns, the FTC's case primarily focused on the deal's impact on Sony and the PlayStation business. Now, the judge has rejected the FTC's request for an injunction to stop the deal from closing.

The FTC's case requested that an injunction be granted to stop the deal from closing on the grounds that it would harm competition. Much of the FTC's case centred around the impact it would have on Sony, but Microsoft was able to successfully argue that it would not and could not foreclose the PlayStation business by pulling games like Call of Duty. Microsoft was also able to argue the merits of its recent deals with cloud gaming companies to bring games to services like GeForce Now, as well as Microsoft's commitment to bring Call of Duty to Nintendo consoles for the first time in over a decade.

The hearing wrapped up after five days and now almost a week later, U.S. Federal Judge Corley has ruled against the FTC's injunction request. This immediately frees up Microsoft to close the Activision Blizzard deal. However, the company may not be so quick to do so, as the UK's CMA has still vetoed the deal and an appeals case to reverse the ruling is still ongoing.

The FTC can also sue to force Microsoft to sell Activision Blizzard after the deal closes, but given the FTC's loss here, it is thought by some analysts that further action is unlikely, or at the very least, unlikely to succeed. The FTC's current loss could also help Microsoft arrange a settlement with the CMA to get the deal approved without having to go through further CAT appeals hearings.

Xbox head, Phil Spencer, has commented on the outcome of the hearing, saying:

“We're grateful to the court for swiftly deciding in our favour. The evidence showed the Activision Blizzard deal is good for the industry and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market. Since we first announced this deal, our commitment to bringing more games to more people on more devices has only grown. We’ve signed multiple agreements to make Activision Blizzard’s games, Xbox first-party games and Game Pass all available to more players than they are today. We know that players around the world have been watching this case closely and I’m proud of our efforts to expand player access and choice throughout this journey.”

As reported by Windows Central, Microsoft President, Brad Smith, has also commented on the outcome today, saying: “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. As we've demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

Update: Brad Smith has issued another statement publicly, announcing that Microsoft and the CMA have agreed to negotiate on the deal. Read our full story on that, HERE. 

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KitGuru Says: It is unclear if the FTC will take further action and it is possible that the CMA still wins the appeal and is able to remain firm on the initial ruling. However, Microsoft could potentially close without the CMA's approval, so we'll have to wait and see what happens in the weeks to come. There is a July 18th deadline for Microsoft to complete the transaction without a renegotiation and a potential $3 billion fee. 

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