Microsoft triumphs over FTC again in challenge to $69 billion Activision Blizzard deal

The United States Federal Trade Commission’s demand that the federal courts halt Microsoft’s $69 billion acquisition of Activision Blizzard (which wrapped up in late 2023) has been dealt what might be a fatal body blow. Today, a federal appeals court denied the Commission’s appeal of a lower court’s decision to not issue a preliminary injunction blocking the deal. The three-judge panel located in the Ninth Circuit declared in a ruling obtained by Reuters that the lower court had applied the correct legal standards in reviewing the FTC’s request and that the agency had not sufficiently shown it could successfully argue that the merger would hamper competition.

Today’s ruling is likely welcomed by Microsoft, which repeatedly slammed the FTC’s allegations that the merger would harm competition in the video game marketplace, briefly arguing the agency’s existence was unconstitutional.

Microsoft has abided by its promises made to the FTC and other regulators regarding the availability of high-profile Activision Blizzard games like Call of Duty and Diablo IV on non-Xbox platforms. It has, however, raised prices on the Xbox Game Pass subscription service tiers that allow access to newly-acquired first-party games. It’s also joined Nintendo in announcing it will increase the base pricing of its premium games to $80.

Related:PlayStation spins out new internal studio from Bungie

And like many corporations that spent millions (or billions) of dollars purchasing other studios from 2020 through 2023, it concluded its acquisition by laying off thousands of developers and closing some of its purchased studios.

The FTC isn’t likely to pursue further action against Xbox

This may not be the end of FTC’s quest to sanctioning Microsoft’s acquisition of Activision Blizzard. The agency may still appeal the decision to the US Supreme Court, or choose to revive its internal administrative challenge that was suspended in mid-2023 pending the outcome of the court case. In 2024 the agency hounded Microsoft over its decision to lay off over 1,900 workers after the acquisition, and its alleged “degrading” of Xbox Game Pass.

But that was 2024, when the FTC was headed by Lina Khan under the administration of president Joe Biden. Khan spent her tenure aggressively challenging corporate mergers, challenges that have faded since her departure after the election of Donald Trump. Current FTC chairman Andrew Ferguson has declared that the FTC should “stay in its lane” when it comes to the enforcement of consumer protection laws, though he’s declared an interest in going after tech platforms over content violation policies that violate “free speech.” (Free speech advocates have countered that Ferguson’s proposed action threatens the concept of free speech, and does not defend it).

Related:Starbreeze to acquire Payday 3 publishing rights from Embracer subsidiary Plaion

With the FTC turning its gaze to regulatory action favored by President Trump (himself banned from many online platforms following his encouragement of the January 6 attack on the US Capitol), it’s unlikely the agency will take any interest in the video game marketplace any time soon.

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