The Federal Trade Commission (FTC) has experienced another setback in its efforts to block Microsoft’s acquisition of Activision Blizzard. This comes after a US federal judge denied the FTC’s request for a preliminary injunction to halt the deal until the conclusion of a separate FTC administrative case. The FTC appealed the judge’s decision, but the Ninth Circuit Court of Appeals has now denied its request for emergency relief.
With this ruling, Microsoft is now free to proceed with its purchase of Activision Blizzard once a temporary restraining order, issued as part of Judge Corley’s order, expires at 11:59PM PT tonight. Microsoft has until July 18th to close the deal; otherwise, it will need to renegotiate terms with Activision Blizzard or pay $3 billion in breakup fees.
However, the deal still faces hurdles in the United Kingdom. The Competition and Markets Authority (CMA) in the UK blocked Microsoft’s acquisition earlier this year, expressing concerns about competition in the emerging cloud gaming market. Both the CMA and Microsoft have agreed to pause their legal battles to explore potential modifications to the transaction that could address the CMA’s concerns regarding cloud gaming.
Earlier this week, the CMA warned that Microsoft’s proposals might trigger a new merger investigation, and discussions with Microsoft are still in the early stages. The CMA has also extended the deadline for its overall investigation into the deal from July 18th to August 29th, indicating that further analysis is needed.
In light of these developments, Bloomberg reported that Microsoft is considering selling UK cloud gaming rights to a telecommunications, gaming, or internet company. This move would potentially allow the Activision deal to move forward in the UK without running afoul of the CMA’s concerns.
It remains to be seen how the UK regulatory landscape will evolve in the coming weeks and whether Microsoft’s proposed modifications will be sufficient to address the CMA’s competition fears. The extension of the investigation deadline suggests that the CMA is taking a thorough approach to evaluating the deal’s potential impact on the market.
In the meantime, Microsoft can proceed with its plans to acquire Activision Blizzard in other jurisdictions where regulatory challenges have been resolved. The acquisition has significant implications for both companies and the broader gaming industry. Microsoft’s access to Activision Blizzard’s portfolio of popular franchises, such as Call of Duty and World of Warcraft, would enhance its position in the gaming market and strengthen its capabilities in cloud gaming.
Additionally, the deal would expand Microsoft’s influence in the esports space, as Activision Blizzard is a major player in competitive gaming. This acquisition aligns with Microsoft’s overall strategy of bolstering its presence in the gaming industry and expanding its gaming subscription services, such as Xbox Game Pass.
The outcome of the FTC’s appeal and the ongoing discussions with the CMA will shape the future of Microsoft’s acquisition of Activision Blizzard. Regardless of the challenges faced, it is clear that Microsoft is determined to move forward with the deal and capitalize on the opportunities presented by the gaming and esports markets.
