A federal judge on Tuesday cleared the path for Microsoft to buy the Call of Duty developer Activision Blizzard for $75billion.
The Federal Trade Commission had been hoping to scupper the proposed deal, which would make Microsoft the third biggest gaming company in the world.
But in her ruling, Judge Jacqueline Scott Corley dismissed claims the deal would impinge on the availability of games, saying: ‘To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content.’
The move by the FTC formed part of a wider effort by the Biden administration to block big mergers – a central focus of the president’s economic policy.
Microsoft CEO Satya Nadella (pictured) arrives at federal court on June 28 in San Francisco for a trial in which he testified that Microsoft would preserve access to Call of Duty on the PlayStation
Bobby Kotick (pictured outside the court in June), the chief executive of Activision, said in a statement that the merger would ‘enable competition rather than allow entrenched market leaders to continue to dominate’
On Tuesday when markets opened Activision shares were trading at around the $83 mark – and had been for around a month – but by 3pm it was up nearly 10 percent to more than $90 a share
During the hearing, District Judge Jacqueline Scott Corley, a Biden nominee, did express concern regarding the potential harm if Microsoft were to hypothetically restrict Call of Duty to Microsoft’s Xbox gaming devices.
The popular video game series Halo, a similar style of first-person shooter to Call of Duty, was developed by Bungie, bought by Microsoft in 2000, and has never been released on Sony’s PlayStation devices.
‘Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny,’ wrote Judge Corley in her July 11 ruling denying an injunction.
‘That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox,’ she added.
She also noted that a similar commitment had been made with Nintendo to bring Call of Duty to its device the Nintendo Switch.
News of the ruling sent Activision’s share price soaring. On Tuesday when markets opened it was trading at around the $83 mark – and had been for around a month – but by 3pm was up nearly 10 percent to more than $90 a share.
Bobby Kotick, the chief executive of Activision, said in a statement that the merger would ‘enable competition rather than allow entrenched market leaders to continue to dominate.’
In her ruling on July 11, the judge described the $75billion as potentially one of ‘largest in tech history’ and said it ‘deserves scrutiny’
Microsoft’s acquisition attempt was previously slammed by FTC Chair Lina Khan as an unfair merger which will stifle competition across the video game sector. Pictured is Microsoft founder Bill Gates
‘We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution,’ said Microsoft President Brad Smith.
‘As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns,’ he added.
‘It’s been clear to us from the beginning that this deal benefits gamers, gives them more choice and lowers the barriers to access videogames,’ Jefferies analyst Andrew Uerkwitz told The Wall Street Journal.
‘Microsoft did a good job of displaying that importance.’
During the trial last month many high profile individuals were called to the witness stand. Microsoft CEO testified that his company would make Activision games available on other platforms.
The sale of Activision Blizzard – the maker of Call of Duty, Crash Bandicoot, World of Warcraft and Candy Crush – is now set to go ahead as planned in a week on July 18.
Owner of the Xbox platform Microsoft launched a bid for Activision Blizzard early last year, seeking to establish the world’s third-biggest gaming firm by revenue after China’s Tencent and Japan’s PlayStation maker Sony.
While the European Union greenlit the deal, Microsoft still needs to overcome a veto from the Competition and Markets Authority in the UK.
The FTC unsuccessfully claimed that Microsoft, which owns the Xbox gaming system, would have too much market power through being a major console maker and owning Activision
The judge’s ruling marks a major setback to FTC Chair Lina Khan (pictured), an antitrust academic who had been an advocate of breaking up the biggest tech firms before she was nominated by President Joe Biden to the job in 2021
That effort, however, looked more promising on Tuesday, when the CMA invited Microsoft to make proposals as to how it would mitigate competition concerns.
Microsoft was set for an appeal hearing in London later this month, but the company said it would consider further ways to satisfy the CMA.
‘We stand ready to consider any proposals from Microsoft to restructure the transaction in a way that would address the concerns,’ a CMA spokesperson said.
In the US the FTC could also continue to pursue its case, though the judge’s ruling weakened the legal foundations of that prospect considerably.
The ruling dealt another defeat to the FTC, which is led by Lina Khan, an antitrust academic who had been an advocate of breaking up the biggest tech firms before she was nominated by President Joe Biden to the job in 2021.
In the same California court, Khan lost an attempt to stop Meta, Facebook’s parent company, from acquiring Within Unlimited, a fitness app startup.
Microsoft confirmed Monday that it will eliminate more jobs in addition to the 10,000 employees it laid off in January.
