Microsoft’s bid to acquire Activision Blizzard has received a significant boost as a US judge has dismissed a request from US regulators to block the deal.
The Federal Trade Commission (FTC) had raised concerns that the $69 billion (£54 billion) merger would result in reduced competition.
This decision indicates the possibility that Microsoft’s acquisition will proceed as planned.
It would mark the largest deal ever in the gaming industry.
With the increasingly competitive gaming market, Microsoft aims to keep pace with market leaders PlayStation and Nintendo by investing heavily in gaming content. This strategy aims to entice players to choose Microsoft’s platforms, such as the Xbox, over their competitors.
Microsoft seeks to gain control of Activision Blizzard’s extensive portfolio of highly successful games.
Activision Blizzard is responsible for renowned titles like Call of Duty, World of Warcraft, Diablo, and Overwatch. Additionally, the company owns King, the mobile games developer famous for Candy Crush.
The fate of the Call of Duty franchise played a crucial role in the regulators’ concerns.
PlayStation boss Jim Ryan, supporting the regulators, stated in a video deposition that Microsoft would likely limit access to the series for PlayStation users or provide them with a degraded version.
However, Microsoft countered by offering a 10-year licensing agreement to Sony for the game. They argued that it would be financially unwise to restrict access to a game with such a massive following.
Judge Jacqueline Scott Corley stated that the testimony presented during a week-long hearing in San Francisco failed to convince her that the FTC could substantiate its claims.
“The FTC has not demonstrated that the combined company is likely to remove Call of Duty from Sony PlayStation or that its ownership of Activision content will significantly diminish competition in the video game library subscription and cloud gaming markets,” she wrote.
This ruling does not necessarily conclude the process, as the FTC can appeal the decision. Additionally, the FTC has separately challenged the merger in an administrative court proceeding.
Approval from regulatory bodies in the US, EU, and UK is required for the deal to proceed in its current form.
The European Union has already approved the deal, while the UK’s decision to block the merger is currently being appealed.
Microsoft President Brad Smith stated that the company has agreed to pause litigation with the UK’s Competition and Markets Authority. At the same time, they work together to address concerns and modify the transaction if necessary.
Following the US court decision, Smith emphasized the focus on the UK, saying, “While we disagree with the CMA’s concerns, we are considering modifications to the transaction to address those concerns in a manner acceptable to the CMA.”
If the deal falls through, Microsoft could be obligated to pay a $3 billion fee to Activision Blizzard.
Activision Blizzard CEO Bobby Kotick expressed confidence in the merger, stating, “Our merger will benefit consumers and workers. It will foster competition rather than allowing established market leaders to continue dominating our rapidly expanding industry.”
The outcome of the US judge’s decision to reject the request from regulators to block Microsoft’s acquisition of Activision Blizzard has significantly increased the likelihood of the deal moving forward. As Microsoft aims to strengthen its position in the highly competitive gaming market, acquiring Activision Blizzard’s impressive game portfolio holds great potential. However, the outcome still depends on gaining regulatory approvals from the US, EU, and UK. With the future of this monumental deal still hanging in the balance, the gaming industry and players worldwide eagerly await the resolution of these regulatory processes.
