US appeals court confirms Activision Blizzard takeover by Microsoft
Microsoft can breathe a sigh of relief. A US appeals court rejects the FTC's appeal against the 69 billion dollar takeover of Activision Blizzard.
(Image: Sergei Elagin/Shutterstock.com)
A US appeals court has confirmed that the USD 69 billion takeover of video game developer Activision Blizzard by US tech group Microsoft does not violate antitrust laws, dealing a major blow to the US Federal Trade Commission (FTC).
On Wednesday, the San Francisco-based 9th US Circuit Court of Appeals upheld a lower court's ruling that the FTC was not entitled to an injunction to block the takeover deal. In the unanimous opinion of the three-judge panel, "the district court applied the correct legal standard and neither abused its discretion nor relied on clearly erroneous findings in concluding that the FTC had not presented sufficient evidence to establish the requisite likelihood of success on the merits of its claim." And further: "Thus, the FTC had not raised serious questions as to whether the proposed merger was likely to substantially lessen competition in the relevant markets."
Protracted legal dispute
The decision was issued as part of antitrust proceedings brought by the FTC against Microsoft at the end of 2022. The authority believes that Microsoft's acquisition of Call of Duty maker Activision Blizzard would enable it to suppress competitors to its Xbox game consoles and its fast-growing subscription and cloud gaming business.
The FTC initially sought the injunction to prevent Microsoft from completing the Activision Blizzard acquisition in the short term. However, US District Judge Jacqueline Scott Corley refused to block the takeover in July 2023 and cleared the deal because she deemed it to be positive for consumers. Among other things, Microsoft had committed to keeping "Call of Duty" on the Playstation on par with the Xbox for ten years. The company had also agreed with Nintendo to port "Call of Duty" to the Switch and made several agreements to bring Activision's content to various cloud gaming services. The FTC failed to show that Microsoft's acquisition of Activision Blizzard could substantially lessen competition, the judge said. The FTC appealed against this, but the appeal was rejected.
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In addition, the FTC challenged the merger separately in an internal administrative proceeding. These proceedings were put on hold in 2023 during President Joseph Biden's term of office pending a decision by the 9th US Circuit Court of Appeals. The FTC's lawsuit, which has now been dismissed, was aimed at ordering the Activision Blizzard acquisition to be frozen while the antitrust authority continues its administrative challenge.
Opposition from the USA and the UK
Opposition to the takeover came not only from the USA but also from the UK. The British antitrust authority CMA also temporarily blocked the deal, but was ultimately swayed by additional concessions from Microsoft. "The new agreement will prevent Microsoft from hindering competition in the emerging cloud gaming market," the authority said at the time. "This will ensure competitive prices and services for UK consumers."
There was no major resistance from the EU Commission, which approved the deal back in May 2023 and waived a new review after Microsoft amended the takeover structure once again as a concession to the CMA.
The Activision Blizzard takeover by Microsoft is the largest merger in the video games market to date. Following the FTC's defeat in the Court of Appeal, it now appears to have been finalized. It was already considered highly unlikely that the takeover could be reversed at a later date.
(akn)
