Microsoft has received a favorable decision from a federal judge in California in its bid to acquire video game publisher Activision. The judge dismissed the request by the US competition authority, the Federal Trade Commission (FTC), for an immediate suspension of the acquisition. This initial setback for the US government paves the way for Microsoft to proceed with the purchase.
The ruling, released on Tuesday, only pertains to the emergency proceeding filed by the FTC and not the overall merits of the case, which will be decided at a later date. A hearing for the case is scheduled for the end of August.
The FTC had initiated the summary procedure based on press reports that suggested Microsoft and Activision were on the verge of finalizing the acquisition despite opposition from multiple regulators. The UK’s Competition and Markets Authority (CMA) also blocked the merger, citing concerns over competition in the cloud gaming market.
However, Microsoft President Brad Smith announced that the company would submit proposals to the CMA to address its concerns about the acquisition in a satisfactory manner. The CMA expressed its readiness to review any proposals from Microsoft to amend the transaction.
As a gesture of goodwill, Microsoft has chosen to suspend its legal action against the initial veto by the CMA, which was set for an appeal hearing in late July. To secure approval from the CMA, Microsoft has reportedly offered to make minor asset divestments.
The European Commission had already approved the acquisition in May, which would make Microsoft the third-largest player in the video game industry, with a transaction valued at $69 billion.
The California judge’s decision represents a setback for the FTC and suggests a challenging legal journey for the regulator. The judge stated that the FTC had not demonstrated its ability to prove that the acquisition would harm competition in the industry.
Microsoft expressed gratitude for the court’s decision and hopes for a swift resolution to any remaining disputes. The company reaffirmed its commitment to addressing regulator’s concerns.
The FTC, on the other hand, expressed disappointment with the decision, citing the perceived threat the merger poses to online gaming, subscription services, and consoles. The FTC spokesman stated that they would announce the next steps in their fight to preserve competition and protect consumers in the coming days.
President Joe Biden’s administration has taken a more aggressive stance in protecting competition compared to previous administrations. It has successfully blocked several high-profile mergers, such as the takeover of Simon & Schuster by Penguin Random House and the alliance between JetBlue and American Airlines.
However, the administration has also faced rejections in other cases, including the acquisition of EverWatch Corp by Booz Allen Hamilton and the takeover of Within Unlimited by Meta (Facebook).
The outcome of Microsoft’s bid to acquire Activision remains uncertain, with legal proceedings and regulatory scrutiny still ongoing. The final decision will have significant implications for the video game industry and the competitive landscape within it.
