Microsoft has achieved a significant victory in its bid to acquire Activision Blizzard. The U.S. Federal Trade Commission’s (FTC) attempt to block the $69 billion deal has been defeated in court, allowing Microsoft to proceed with the merger. The decision by Judge Jacqueline Scott Corley in San Francisco means that Microsoft can now close the deal ahead of the July 18 deadline, with the exception of the U.K., where the deal was vetoed in May.
One of the main reasons cited by Microsoft for the acquisition is its desire to expand its presence in mobile gaming, an area where it currently has a limited presence. Activision, the owner of King, the maker of Candy Crush, holds a strong position in the mobile gaming market. This strategic move will enable Microsoft to establish itself as the third-largest global video game company, behind China’s Tencent Holdings and Sony, Microsoft has said.
Following the court’s decision, Activision’s stock rose by as much as 6% and was trading up 4.4% at $86.31. Meanwhile, Microsoft’s stock fell slightly by less than 1% to $330.06.
Microsoft President Brad Smith expressed gratitude to the San Francisco court for its quick and thorough decision, and expressed hope that other jurisdictions would reach a timely resolution. Smith reiterated Microsoft’s commitment to addressing regulatory concerns in a creative and collaborative manner.
Activision’s Chief Executive Officer, Bobby Kotick, believes that the merger will benefit both consumers and workers, as it will foster competition in the rapidly growing gaming industry.
Notwithstanding the outcome, the FTC expressed disappointment and highlighted its concerns about the potential threat that the merger poses to open competition in cloud gaming, subscription services, and consoles. The FTC spokesman, Douglas Farrar, stated that they would announce their next steps in the coming days to continue their fight to preserve competition and protect consumers.
Judge Scott Corley’s decision denied the FTC’s preliminary injunction, which sought to block the deal on the grounds that it would harm gamers. During a June hearing, the FTC argued that the merger would give the combined company an incentive to withhold popular titles, such as Call of Duty, from rival consoles and subscription services.
This lawsuit forms part of the FTC Chair Lina Khan’s efforts to more actively regulate mergers, particularly those involving major tech platforms. Since taking charge in June 2021, the FTC under Khan has already blocked mergers between Lockheed Martin and Aerojet Rocketdyne Holdings, as well as Nvidia’s attempted acquisition of SoftBank Group’s Arm.
Microsoft’s foray into mobile gaming will receive a significant boost through the inclusion of Activision Blizzard’s Candy Crush and Call of Duty Mobile. Mobile gaming is the fastest-growing segment within the industry, with a value of $92 billion, accounting for half of the global gaming market, as estimated by analytics firm NewZoo.
However, critics have expressed concerns that Microsoft may leverage its newfound power to disadvantage competitors like Sony by limiting access to blockbuster titles or releasing games exclusively for Xbox and PC platforms.
In conclusion, Microsoft’s victory in the U.S. court allows the company to proceed with its acquisition of Activision Blizzard. The decision is a blow to the FTC’s efforts to block the deal, but the regulatory body has vowed to continue its fight to preserve competition and protect consumers. With the addition of Activision’s popular mobile games, Microsoft aims to strengthen its position in the gaming industry while fostering competition. The outcome of this case showcases the ongoing challenges faced by regulators in balancing the growth of tech giants with the need to ensure fair competition in the market.
