Microsoft Has Won the FTC Appeal That Still Challenged Its Acquisition of Activision Blizzard

It’s taken nearly two years, but the FTC appeal against Judge Jacqueline Scott Corley of the Northern District of California’s decision to block the Activision Blizzard deal with a preliminary injunction is concluded, and Microsoft has won once again.

Reuters reports that the three-judge panel of San Francisco’s 9th U.S. Circuit Court of Appeals unanimously ruled in favor of Microsoft. More specifically, they decreed that the district court had applied the correct legal standards when it ruled in July 2023.

1. First, pertaining to the console market, the panel agreed with the district court that the FTC failed to sufficiently show that Microsoft would foreclose or partially foreclose rivals after the merger either by making the popular game Call of Duty exclusive to its Xbox console or by releasing only an inferior version of the game for Sony’s rival PlayStation.
2. The panel next found that as to the library subscription services market, the district court did not abuse its discretion by holding that the FTC had not made an adequate showing that the merger would substantially lessen competition. Because Activision Blizzard had long opposed putting its content on library subscription services, the merger’s effect of making such content available for the first time in the subscription market, even if exclusive to Microsoft, would not substantially lessen competition.
3. Finally, the district court did not abuse its discretion in similarly finding an insufficient likelihood of success on the FTC’s claim that the merger would substantially lessen competition in the cloud-streaming market, given that the FTC failed to show that Activision Blizzard content would be available to this market in the absence of the merger.

That ruling was the definitive step towards Microsoft’s finalization of the $68.7 billion acquisition. The whole deal could have fallen apart if the judge ruled in favor of the US Federal Trade Commission. Microsoft would formally announce the acquisition’s closing on October 13, 2023.

The FTC’s fears that Microsoft could make Call of Duty exclusive to the Xbox platform turned out to be completely unfounded. In fact, the Xbox and Windows company shifted its strategy toward the opposite side of the spectrum, opting to bring all of its games even to rival consoles such as those made by PlayStation and Nintendo. Just two days ago, they announced that Gears of War: Reloaded will bring the original trilogy of the sci-fi third-person shooter to PlayStation 5 this Summer.

Between that and the fact that all of Microsoft-owned games are now available on cloud services such as NVIDIA GeForce NOW and Boosteroid, there’s no doubt that a wider audience is able to play those games following the acquisition.